American Confidence, or Lack Thereof

A wealth manager I know sends out a quarterly letter to clients that summarizes his view of the economy and his resultant investing plans. Here’s a nice paragraph from his most recent letter:

A key to any short-term outlook is what Americans are thinking. Most have been very wary about the upturn, given the widespread talk about the decline and fall of the United States; almost half of American people think the U.S. has already been surpassed by China in economic progress. (Actually, the average Chinese family has a small fraction of the income of the American one.)

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  1. VB in NV says:

    OK Stephen, what did he conclude? Is the US’s upturn for real but half of its people are unwilling to acknowledge it? Is half of the United States’ population completely ignorant?

    Where is he investing his clients’ money?

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  2. Seth B says:

    Americans have strangely forgotten the similar fear over Japanese ascent 20 years ago. The Chinese are no where close to overtaking the US. Although it may eventually happen in total GDP in the next 20 or 30 years, it will be far longer until it happens in per capita GDP. That level of growth can not happen without significant setbacks. Their advantages (size, decreased beuracracy, undervalued currency) can easily become liabilities as growth continues.

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  3. Emily says:

    really interesting!

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  4. Dave says:

    GDP per capita or average income is not a good measure of what is happening in China compared to the USA. The point is they are on their way up and we are on our way down. We’ve refused to accept that a free-market system doesn’t provide satisfactory results for most Americans given the use of offshore labor and the competition for such labor between corporations that utilize that labor.

    There’s a good reason for low confidence, because workers don’t want to lower their standard of living to that of the Chinese, which will occur under free market conditions. So our system has failed, period. It is time to think of new ways to make it work, but nobody is doing that and our political system seems incapable of it. So we are declining rapidly and they are rising rapidly.

    I think many Americans know how bad the situation is regardless of the attempts by some to keep the orchestra playing all the way until they slip below the water line…

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  5. Eileen Wyatt says:

    Context?

    Wages in the U.S. rose very little from 2003 until the start of the 2008 recession sent jobs plummeting, and the 2002 recession had a “jobless recovery.”

    Meanwhile, although average Chinese family income remains low, it has improved a good deal over the same period. So it’s not unreasonable to believe that China has made more progress than the U.S. Growing incomes > flat or declining incomes.

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  6. Eric M. Jones says:

    @4–Dave:

    Gosh, I hope you are wrong.

    I can name the day I knew it was over; when I learned that Dick Cheney had NO US INVESTMENTS!

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  7. Ian Kemmish says:

    If you want to really depress yourself, see how many Americans can draw China on a world map….

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  8. Pankit Patel says:

    Economically speaking, this whole race of – Which country will gain/retain being the worlds “superpower” will only be a hindrance towards world prosperity. That very attitude may result to a countries downfall. Unfortunately, that very attitude also is the tone of today’s politics.
    People need to realize that in todays global economy, we’re all riding in the same boat, we all rise and subside to together.

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