One of my favourite financial commentators is Jim O'Neill, who heads up the asset management division of Goldman Sachs (NYSE: GS). He's the guy who famously coined the acronym BRIC to refer to Brazil, Russia, India, and China, and he's just written a new book titled The Growth Map, which explores economic opportunity around the globe.
In addition to his enthusiasm for booming economies like the BRICs and emerging economic powerhouses like South Korea and Mexico, O'Neill is surprisingly bullish on the United States. Just recently, he suggested that the world shouldn't count America out.
O'Neill feels that real progress is being made in the housing and energy sectors of the American economy, which will help lead the recovery. And he even believes unemployment will drop more than many of his fellow pundits are forecasting. A look at some recent studies seems to support O'Neill's overall outlook.
Energising America
Last week we heard some very encouraging news on the energy front. A Bloomberg report noted that America's domestic oil output is the highest in eight years, and projected that the United States could become the world's top energy producer by 2020 – which could result in higher incomes, employment, and government revenue in the near future.
Is the housing bottom finally here?
There's also evidence that the housing market is improving. The well-respected blog Calculated Risk argues that we may have finally reached a bottom in housing prices. The blog feels that we've already seen the bottom for housing starts and new home sales, and that the bottom for housing prices should be reached around March 2012.
Hear our engines roar
Clint Eastwood declared in the now notorious Super Bowl ad that "the world's gonna hear the roar of our engines." Actually, there seems to be a lot of evidence that it already is hearing that roar. The US is obviously not out of the woods yet by any means. The one big thing that worries O'Neill about the United States is what he considers a completely dysfunctional political system, which seems more than capable of snatching defeat from the jaws of victory.
Good news for Australia
Despite our growing trade flows with Asia (and China in particular), the US economy remains the largest in the world, and a healthy United States still means a healthy world economy (not least for us because the US will be buying a lot of what China is producing).
Indirectly, too, a thriving America will boost confidence world-wide, and while Europe is currently close to a stall, the economic activity that will come from a resurgent United States will have what economists call a 'multiplier' effect around the world – ripples which will reach even the furthest corners of the global economy.
Foolish take-away
There are almost no Australian businesses that won't benefit from growing confidence and economic activity. Miners such as BHP Billiton (ASX: BHP), Rio Tinto (ASX: RIO) and Fortescue (ASX: FMG) will appreciate the added confidence in continued Chinese demand for our resources.
Wholesale finding costs should fall, benefitting our banks, and consumer confidence – which truly has become globally contagious (when it both improves and worsens) in the last decade, will improve the lot of discretionary retailers, both those with international reach such as Billabong International (ASX: BBG) and shopping centre king Westfield Group (ASX: WDC), but also those who operate predominantly or solely at home, including struggling Myer Holdings (ASX: MYR) and JB Hi-Fi (ASX: JBH).
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Scott Phillips Is The Motley Fool's feature columnist. Scott owns shares in Westfield Group and Westfield Retail Trust. You can follow him on Twitter @TMFGilla. The Motley Fool's purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
A version of this article, written by John Reeves, originally appeared on fool.com
