That’s the main message from Jim Paulsen, chief investment strategist at Wells Capital Management during the 17th annual Southern Colorado Economic Forum.
Consumer confidence in the markets and the economy is growing – and continued growth means that the economy will continue it’s upward swing, he said.
“For a long time, the world was ending,” he said. “And every time there was a crisis, people froze at the switch. But we’ve had a lot of economic crisis in the past year, and the markets have just yawned. I think we’ve been in a hypochondriac apocalypse mode – and now we’re coming out of that.”
But the upward swing isn’t going to be fast – it will be slow, he says, but prolonged.
“We haven’t had a jackrabbit start after a recession in 25 years,” he said. “This isn’t the first slow start – it’s the third.”
And there’s a very good reason for it: the aging demographic in the G-10 nations. Older workers means fewer people entering the workforce, he said.
“You are all getting older,” Paulsen said. “And that’s going to mean a slower recovery. But it should be a long recovery. Which is better 5 to 8 percent growth for four years or 2 to 3 percent growth for 10 years? I don’t know. It’s just different now.”
There’s plenty of good news about the economy: U.S. energy independence, pent-up demand for big-ticket items like houses and cars; less household debt and more balanced books.
“The U.S households have a net worth of $75 trillion,” he said. “I keep hearing we’re broke. We’re not broke. We have $75 trillion after debts or liability – that’s seven years of consumption.”
And the deficit that everyone’s so worried about? Forget it, Paulsen said.
“In 2008, the deficit was 10 percent of GDP (gross domestic product),” he said. “Now, it’s 4 percent. Everyone thought Bill Clinton was a great deficit manager. What did he do? Nothing. He left the markets alone, and they responded. The deficit always goes up during a recession.”
Forget other worries too – about health care, about oil.
“There’s this invisible hand taking care of things,” he said. “Don’t expect the government to fix it. They’re not gonna. They’re arguing. It’s laissez faire. It’s the great thing about capitalism.”
Laissez faire means allowing private markets to take care of things free of government control or restrictions. And according to Paulsen, it solved the nation’s energy problems.
“Since 1979, no president would allow oil prices to go up; it was political suicide,” he said. “But when oil hit $100 a barrel, all those greedy capitalists wanted in the energy development field. Now, net imports are dropping and net exports are gaining. It’s going to be a big asset in the future.”
If confidence levels continue to rise, Paulsen believes the worst of the economic recession will fade into memory.
But it will be up to the private sector.
“Government – it’s a great reality television show,” he said. “I can’t wait for the fall season. They’re starting off with a fiscal cliffhanger. It’s going to be great.”
But it won’t be catastrophic for the economy, he said.
“People are starting not to panic every time there’s a problem,” he said. “And that’s good for the economy. We still have problems; we still have challenges. It’s not the end of the world, however.”