The American phoenix is slowly rising again. Within five years or so, the US will be well on its way to self-sufficiency in fuel and energy. Manufacturing will have closed the labour gap with China in a clutch of key industries. The current account might even be in surplus.What accounts for Evans-Pritchard's contrarian view? He explains that the biggest driver of an American renewal is abundant energy:
The making of computers, electrical equipment, machinery, autos and other goods may shift back to the US from China.
Assumptions that the Great Republic must inevitably spiral into economic and strategic decline - so like the chatter of the late 1980s, when Japan was in vogue - will seem wildly off the mark by then.
Telegraph readers already know about the "shale gas revolution" that has turned America into the world’s number one producer of natural gas, ahead of Russia. Less known is that the technology of hydraulic fracturing - breaking rocks with jets of water - will also bring a quantum leap in shale oil supply, mostly from the Bakken fields in North Dakota, Eagle Ford in Texas, and other reserves across the Mid-West.He also thinks that the Chinese economic success will ultimately prove unsustainable:
"The US was the single largest contributor to global oil supply growth last year, with a net 395,000 barrels per day," said Francisco Blanch from Bank of America, comparing the Dakota fields to a new North Sea.
Total US shale output is "set to expand dramatically" as fresh sources come on stream, possibly reaching 5.5 million barrels per day by mid-decade. This is a tenfold rise since 2009.
The US already meets 72% of its own oil needs, up from around 50% a decade ago.
"The implications of this shift are very large for geopolitics, energy security, historical military alliances and economic activity. As US reliance on the Middle East continues to drop, Europe is turning more dependent and will likely become more exposed to rent-seeking behaviour from oligopolistic players," said Mr Blanch.
Meanwhile, the China-US seesaw is about to swing the other way. Offshoring is out, 're-inshoring' is the new fashion.There's more on these positive indicators for the future at the link.
"Made in America, Again" - a report this month by Boston Consulting Group - said Chinese wage inflation running at 16% a year for a decade has closed much of the cost gap. China is no longer the "default location" for cheap plants supplying the US.
A "tipping point" is near in computers, electrical equipment, machinery, autos and motor parts, plastics and rubber, fabricated metals, and even furniture.
"A surprising amount of work that rushed to China over the past decade could soon start to come back," said BCG's Harold Sirkin.
The gap in "productivity-adjusted wages" will narrow from 22% of US levels in 2005 to 43% (61% for the US South) by 2015. Add in [China's] shipping costs, reliability woes, technology piracy, and the advantage shifts back to the US.
He concludes with this:
The switch in advantage to the US is relative. It does not imply a healthy US recovery. The global depression will grind on as much of the Western world tightens fiscal policy and slowly purges debt, and as China deflates its credit bubble.Evans-Pritchard doesn't mention it, but it's hard not to see that both of the drivers of this possible American resurgence are opposed by the Obama administration and the American left. Increased fossil fuel production and the attractiveness to business of the American south where right to work laws and non-union shops make business much more efficient and profitable than elsewhere in the country are both attributes that the left would reverse if they could.
Yet America retains a pack of trump cards, and not just in sixteen of the world’s top twenty universities.
It is almost the only economic power with a fertility rate above 2.0 - and therefore the ability to outgrow debt - in sharp contrast to the demographic decay awaiting Japan, China, Korea, Germany, Italy, and Russia.
The 21st Century may be American after all, just like the last.
If Evans-Pritchard is right the U.S. economy will resume it's global dominance within the next five years as long as it's not strangled in the crib by regulations and taxes imposed by politicians ideologically averse to American dominance in the world.