Sunday, May 15, 2016

076. Global Competitiveness Ranking of the USA

The Global Competitiveness Report for 2015-2016 has been prepared by the  World Economic Forum as an indicator of the relative economic performance of 144 countries.

We have concentrated on the strength and weaknesses of the relative rank of the USA.


Source: http://www3.weforum.org/docs/gcr/2015-2016/Global_Competitiveness_Report_2015-2016.pdf

The relative rankings should be seen in the context that the recent (2005-2014)  total productivity growth has been negative with the exception of India.


 IMPLICATION: The recent negative growth in productivity has depressed the growth in GDP and therefore the growth in stock market valuations.


IMPLICATION: Although the US leads in efficiency and in innovation, the basis economy is lagging - e.g. is mature and is not attracting investments.

The contributing factor to inferior performance of the basic economy it the economic environment.



The economic environment includes: 1. Strong cooperation between the academic world and the private sector. 2.  High level of business sophistication and the capacity to nurture and attract
talent.  3. Excellent education system at all levels. 4. Efficient labor market, with high levels of collaboration between labor and employers and employee protection.  5. Public institutions are effective and transparent. 6. Competitiveness is further buttressed by excellent infrastructure and connectivity and highly developed financial markets.  7. Stability that is superior.

IMPLICATION: The inferiority in the economic environment and in health, education account for the prospects that the market position of the US will be deteriorating.

There are also human capital factors that explain a country's competitiveness.

The table below shows how and increased influence of negative effects will depress its competitiveness.



IMPLICATIONS: The decreasing ranking on the quality of math and science will continue to offset other favorable tendencies, such as the US superiority of retaining talent, which refers particularly to immigrants.


Saturday, May 14, 2016

075. Statistics About the Senior Population

The following is a compilation of graphics about seniors aged over 60.

IMPLICATIONS: The rapid rise in the senior population is the result of increasing longevity. The social implications are: !. Need for greater employment participation; 2. Increased costs of social security; 3. Rising medical costs

074. Projected Global GNP Show Potential Domination by China

The growth of the global  GDP is one of my principal interests because this will ultimately shape the economic future of the next generation.

The following forecast, extracted from Goldman Sachs, offers a unique insight into the projected 2016 GDP.



IMPLICATIONS: The USA and Euro, accounting together for about 25% of the world's GDP, but growing for less than 2% per annum, is starting to become overwhelmed by the 20% share of GDP by China. However, China growing at over 6%  per annum will soon overwhelm the USA and Europe and clearly dominate the world's economy perhaps as soon as 2025-2030 if current growth continues.GD

Thursday, May 12, 2016

073. China GDP Growth Rate Is Likely to Decline

Perhaps one of the most surprising statistics is the enclosed forecast of a decline in China's working population in the next 30 years.  The cause is the 1950 prohibition of Chinese parents to have more than one child.

Perhaps the greatest consequence will be in the rise in social costs for an increasing old population that will require support in retirement. There are insufficient funds to support the incomes of an aging population.


The decline in the working population can be offset through innovation, such as through large scale application of robotics and automation of knowledge processes. According to prof. Solow, the driving variable  in economic  growth is through the improvements in technology. Whether the governance of China will be suitable to impose innovations on the economy, including infrastructure development, remains as one of the key issues to be addressed.

IMPLICATIONS: As China GDP exceeds the GDP of the USA and increases its GDP/Capita a rise in the costs of capital will be needed to pay for old age pensions.

Tuesday, May 10, 2016

072. Forecasts of an Incipient Market Drop

Revenue/Share Year over Year % has crossed the 0% growth line. This is a strong indication of an incipient market recession

S&P 500 Return on Equity has dipped below its average. That signals an incipient recession

When the ratio  of S&P enterprise valuation exceeds the 2nd standard deviation (the highest Bollinger band) that indicates there is an excess above the Yr 2000 recession as well as a higher value than the Yr 2008 recession.


There are also externalities that are starting to drive the US economy in the direction of negative performance. One of these is the rising trade deficit, which will have long-range implications:

SOURCE: http://www.census.gov/foreign-trade/statistics/historical/index.html

The steadily growing negative trade balance will place increasing pressure on the value of the dollar as an international currency/ 





SOURCES: http://doubleline.com/archive/wp-content/uploads/2016/04/MAG-Economic-Update_-_1Q2016.pdf

SUMMARY: A stock market recession is pending soon,










Saturday, May 7, 2016

071. US Debt as a % of US GNP

By end of 2015 the US has become indebted at levels comparable with its wealth-creating GDP.

The prospects for 2017 is to increase debt levels.





SOURCE: Federal Reserve   Economic Data:        - https://research.stlouisfed.org/fred2