A few reasons to be optimistic about the U.S. economy

March 4, 2013
The Washington Post
The Washington Post

I touched on this in my discussion with Jim Tankersley, but perhaps it's worth jotting down a few of the reasons to be optimistic about the American economy.

1) Health-care costs are slowing, and not just because of the recession. If the cost controls being rolled out in Obamacare can hold the trend, much in the U.S. economy, from the budget deficit to wages, looks much brighter.

2) Housing is turning around. And if housing turns, then the Federal Reserve's super-low interest rates could really begin to drive a recovery.

3) It's possible that the worrying descent into genuine malgovernance in the past few years was caused by the extraordinary stresses the recession put on the political system. Since the election, we've seen more normal behavior out of Congress, including a deal to avert the fiscal cliff, a deal to delay the debt ceiling, and intimations of a deal to avoid a government shutdown. We've also seen a genuinely bipartisan and seemingly significant working process towards immigration reform. The sequester was a disappointment, true, but it's possible that the political system is improving. If we can simply claw our back to "mediocre and ineffective," well, that will be a big improvement from 'damaging and unpredictable."

4) Corporate profits remain strong, which mean corporations remain strong. And having a truly competitive private sector isn't an advantage to discount.

5) Neither Europe nor China appear to be tumbling off an economic cliff.

6) A puzzle of the last decade or two is that the technological revolution has changed our lives even as it hasn't done that much to create jobs. But there are some signs this is changing. Computers and smartphones are beginning to interact with the tangible economy in more profound and substantial ways. Driverless cars and assisted medical decisionmaking have clear job-creation potential in ways that the app economy simply doesn't.

7) Natural gas. Natural gas. Natural gas.

8) Talk of an "insourcing boom" speaks to a broader reality: Over the last few decades, we've seen billions of new workers flood into the global economy as China, India and other  once-cloistered nations began to open themselves up to foreign investment. That process will continue, but those countries are developing so quickly that outsourcing is no longer a complete no-brainer and, in another decade or so, their potential as export markets for us will be truly significant. In other words, we might be moving into a period when outsourcing is less attractive and our exports are more attractive.

9) And as Dan Drezner reminds me on Twitter, economic confidence is rebounding. According to Gallup, we've hit a five-year high -- though that high remains sadly low:

Let me be clear: I'm not saying this will be the economic story of the next few decades. I'm simply saying that just as there are reasons to worry about the U.S. economy, there are reasons to believe the coming years might be better than we think. Add in that we are, after the last decade, understandably used to being unpleasantly surprised, and understandably reluctant to get our hopes up, and it becomes even likelier that we're underestimating our economic potential.

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Ezra Klein · March 4, 2013