Will tailwinds win over headwinds? Local investors heard Carl Platou, sr. vp. of American Funds of LA, at the Ag Trade Center last week after a Lori Roberts’ catered luncheon.
Mulling over all he said, I’ll agree with several of his facts, but like all things in life, who really knows what will happen? The strong tailwinds are autos and housing. The average age of vehicles on U.S. roads is eleven years with an average of 165,000 miles driven. That factors. Our Honda is a 2004 model with 99,000 miles.
Globally, folks are dropping their bicycles and buying new cars. In Shanghai, they prefer the big black Buicks, or a few like Toyotas and Hondas. In housing, the demand is especially in the 30-year-olds who probably have just moved out of their folks home.
The worries of 2007 about running out of natural gas have been replaced by worrying about how the U,S, is going to mitigate being the world’s largest exporter.
Because the U.S. is a happy place to be doing business, companies like DOW, Seimens, Samsong, Toyota, BMW are building plants in the U.S. BMW, for example, is now producing carbon fiber products in Moses Lake. Globalization is important for us, too. Companies like Coke make 80 percent of its revenue out of the U,.S.
So, there is massive potential for expansion. Amazingly, Africa is one of those places. They have one of the biggest growing middle classes. “Although there is poverty, despot leaders and chaos, 700 million out of their 900 million have cell phones.
“It’s an exciting environment we’re living in, but challenges to get there,” he said referring to our huge national debt, health care and social security issues which must be addressed.
“Looking back at the last ten years, the economy has been in recession two or three years, the stock market and employment dropped, and the country was involved in two wars.
“We have overcome massive issues in our history. In a Democracy, often it takes a major headwind to fix or solve a problem.”