Some good real estate and US economy/credit rating thoughts by Western Bancorp, Chairman and CEO, Rick Soukoulis.
Everyone knows that our nation’s credit rating has been downgraded, and that we are now just barely above Slovenia. This sounds pretty grim, and even though Slovenia sounds like a funny country, you’re probably thinking of Outer Slobovia from one of the Marx Brothers comedies. Slovenia is actually a thriving nation that came about when Yugoslavia splintered apart twenty years ago.
Despite the downgrade, we’re still the world’s most powerful economy with GDP of $48,000 per person in the U.S.
Do you know that while China is, indeed, on the rise, their average wages are a mere fraction of what they are here in America?
China is doing lots of things right, but let’s not forget that they still have hundreds of millions working a way in rural poverty where they can barely feed their families.
And GDP per person in China? It’s $7,600, or about one sixth of ours!
Let’s do that again: $48,000 per person in the U.S. v. $7,600 per person in China.
This always surprises people, but even with our downgrade last week, we still have a better credit rating than China. That’s worth remembering.
Also, let’s not forget that exogenous unplanned things happen that boost economies dramatically, often when you least expect it. If you go back to the late 1990’s, the internet boom was in full swing and huge fortunes were being made. These huge fortunes paid taxes, and there was lots of jobs created and these new jobs created new tax revenues.
Toward the end of that decade, Y2K hit, and there have been estimates that $3 trillion was spent to upgrade systems.
These two things, the internet exploding as well as Y2K, poured huge amounts into the economy here, and they played a key role in our wiping out our deficit and showing three straight budgetary surpluses.
I’m not going to make predictions of where all this will lead, but I think we sell ourselves short if we think this is the end of America.
We’re in a real mess with our deficit spending, but I have every confidence that we’ll get through it. After all, we’re Americans, and that’s what we do.