The Economist loves us.
In this week’s Leader:
The lessons from America’s astonishing economic record
The world’s biggest economy is leaving its peers ever further in the dust
If there is one thing that Americans of all political stripes can agree on, it is that the economy is broken. Donald Trump, who saw trade as a rip-off and his country in decline, came into office promising to make America great again. President Joe Biden is spending $2trn remaking the economy, hoping to build it back better. Americans are worried. Nearly four-fifths tell pollsters that their children will be worse off than they are, the most since the survey began in 1990, when only about two-fifths were as gloomy. The last time so many thought the economy was in such terrible shape, it was in the throes of the global financial crisis.
Yet the anxiety obscures a stunning success story—one of enduring but underappreciated outperformance. America remains the world’s richest, most productive and most innovative big economy. By an impressive number of measures, it is leaving its peers ever further in the dust.
Start with the familiar measure of economic success: gdp. In 1990 America accounted for a quarter of the world’s output, at market exchange rates. Thirty years on, that share is almost unchanged, even as China has gained economic clout. America’s dominance of the rich world is startling. Today it accounts for 58% of the g7’s gdp, compared with 40% in 1990. Adjusted for purchasing power, only those in über-rich petrostates and financial hubs enjoy a higher income per person. Average incomes have grown much faster than in western Europe or Japan. Also adjusted for purchasing power, they exceed $50,000 in Mississippi, America’s poorest state—higher than in France.
The record is as impressive for many of the ingredients of growth. America has nearly a third more workers than in 1990, compared with a tenth in western Europe and Japan. And, perhaps surprisingly, more of them have graduate and postgraduate degrees. True, Americans work more hours on average than Europeans and the Japanese. But they are significantly more productive than both.
American firms own more than a fifth of patents registered abroad, more than China and Germany put together. All of the five biggest corporate sources of research and development (r&d) are American; in the past year they have spent $200bn. Consumers everywhere have benefited from their innovations in everything from the laptop and the iPhone to artificial-intelligence chatbots. Investors who put $100 into the s&p 500 in 1990 would have more than $2,000 today, four times what they would have earned had they invested elsewhere in the rich world.
You can read the rest of the Economist’s feel-good piece here.
Which stocks will benefit from Generative AI?
Yesterday I instanced a 60-page study by Goldman Sachs, “Generative AI – Part 1: Laying Out The Investment Framework.”
It’s a very bullish report and highlights these stocks MSFT, CRM, ADBE, as its top picks, But it also likes INTU, GOOGL, AMZN, NVDA and META.
Most are on sale today — meaning they’re down. For Goldman’s study, click here.
Bank CDs versus Treasuries
Bank CDs are creeping up in what they pay. Today a three month CD is 5.06%. But it depends on maturity. A three-month treasury will pay more than a bank CD. But a five-year CD will pay more than a five-year treasury.
Most importantly, CDs incur state and local taxes, unless they’re put in an IRA.
Some states are pretty vicious: California eventually has the highest state tax rate in the country, with 13.30% charged on any income over $1 million. Oregon’s state personal income tax rates range from 4.75% to 9.9% of taxable income. When in doubt, stay with short-term treasuries.
Good idea: Put an AirTag in your vehicle
A fellow in Texas stole a truck. Inside was an Apple AirTag. The owner quickly found the truck via the AirTag.
And then? He shot the thief. Click here.
These things are a useful way of holding the AirTag. Click here.
Spurious b.s. invoices and offers
They’re flooding in from “Best Buy,” “PayPal”, “Intuit,” “Norton”
“Use your $50.00 e-Card by Friday (AceHardware)”
And “Zelle® payment is on its way-0.” $1,600 no less.
Now they’re asking me to DocuSign docs that don’t have my name on them.
Nonsense. Scams. Lots of them. And increasingly creative.
All of them to grab my bank account, my social security , etc.
The key is to look at the original email sender’s address. If it looks bogus, it is.
Never, ever encourage your kid to become an economist
They will never get any job satisfaction, since economists never get anything right.
Right now the economists are battling. Will we have a recession? Or not?
It gets worse. Most can’t even agree on what exactly is a recession.
There is much certainty in the professions air conditioning, plumbing, heating, electricity, car repairs, etc.
My favorite pen
Not a ballpoint, but an ink pen. Produces a beautiful thick (1mm) line in red, blue or black.
I have been using them for years. Click here.
My stupid sleep “schedule”
There’s an old Irish song. “I eat when I’m hungry. I sleep when I’m tired.”
I love naps. For me, a couple of one hour naps often make me feel better than an 8-hour sleep through the night.
when I worked in an office, I had two pillows in the drawer that was designed for Pendaflex hanging files.
I push the idea of experimenting. I don’t believe that everyone should sleep from 11 to 7.
How to test your Generac emergency generator
This is the main panel on my Generac. It’s on Auto. That means it should come on if I lose power. Manual allows me to start it any time (and thus test it) — even if I have full commercial power.
Think of the Generac as a car engine. It needs an annual checkup. Oil change, battery check, spark plug replacement, etc.
There’s also a transfer switch that switches power from the Generac to your house and shuts off the Generac when commercial power is restored. You test the transfer switch by shutting off the main breaker coming into your house (the big one) and seeing what happens. Does your Generac come on? Then turn power back and watch if the Generac shuts down.
Everyone needs a Generac. It should be a full house machine — backing up your entire house.
Our Generac works off propane. We have a big enough tank to run the Generac for days.
I love this picture and the history
From Wikipedia:
Pet Rock is a collectible toy made in 1975 by advertising executive Gary Dahl. They were rocks packaged in custom cardboard boxes complete with ventilation holes and straw bedding imitating a pet carrier. The fad lasted about six months, ending after a short increase in sales during the Christmas season of 1975. Dahl sold over 1 million Pet Rocks for $4 each, and became a millionaire.
Too precious
A man and woman were married for many years. Whenever there was a confrontation, the old man would shout, “When I die, I will dig my way up and out of the grave and come back to haunt you for the rest of your life!”
Neighbors feared him. The old man liked the fact that he was feared. One evening, he died.
After the burial, her neighbors, asked, “Aren’t you afraid that he may indeed be able to dig his way out of the grave and haunt you for the rest of your life?”
The wife said, “Let him dig. I had him buried upside down…and I know he won’t ask for directions.”
The world
Florida Gov. Ron DeSantis just signed into law a bill that would ban abortions in the state after six weeks — before many people know they’re pregnant. In short a total ban on abortions in his state. t’s hard to figure his “logic,” if he has any.
Monte Carlo tennis semi-finals start Saturday morning at 7:30 AM EDT.
Please tell your hedgie and venture friends to buy AllBirds (BIRD). Everyone loves their shoes, but hates their financials which are awful. I own a bunch of the $1.25 shares as a spec. I’m actually up nearly 9%. Whoopee.
See you. — Harry Newton
