Being bearish on the US economy has been in fashion for as long as I can remember. “The Downsizing of America”, and all those other books. They sell well, don’t they?
As I said, in the past quarter century millions of jobs have evaporated, and millions more have taken their place. Microsoft, Qualcomm, Cisco, and so on weren’t even around years ago, and now they employ hundreds of thousands each.
Now, we do consume more than we produce, by the tune of $330 billion, as you correctly point out. That is 3% of the economy. Were that to go away, we would have what is usually known as a recession. We will probably have that, as we can’t over-consume forever. But try to keep things in perspective: US economy is 3.5% bigger this year than last year, which is bigger than the year before, and so on, going back a long, long time. We may take a 3% haircut, and it will hurt, I’m not saying it won’t, but it’s just a drop in the bucket in the long run. Economy is twice the size that it was when the other Bush was around.
Regarding the job market, it is tough for some, as it should be. Competition is healthy, even with China and India. Decades ago, we thought all jobs would go to Japan, then to Korea. There always will be a lower-cost locale.
Truth is, if you’re a qualified individual, it is very hard not to find work in the US. People decry the loss of software jobs to India. Yet hundreds of thousands of new college graduates find software jobs in the US every year. And US still imports a large number of highly skilled immigrants to fill vacancies. Five or six years ago, I remember that the US swept the science Nobels. Every single one of the US laureates was a foreign-born US scientist (except one with dual US-German citizenship).
If there is something weak in the US, it is public school education. We do have jobs, we just can’t produce enough qualified people to fill them. The strongest assets are our entrepreneurship culture and very deep capital markets (including venture capital). No other country in the world has managed to produce so many world-class companies (think EBay, Google, Genentech) so fast.
