Tuesday, July 5, 2011

The US Economy - a Visitor's take

Spent a couple of weeks in the US, outside a major city - a visit after several years and was struck by how expensive labour generally remains - as reflected by the cost of labour intensive services including taxis, laundry and baby sitting for example. Sort of flies in the face of everything you might expect after the credit crunch. F&B in restaurants and clubs in comparison is generally only slightly more expensive than in comparable facilities in larger Indian cities.

An American friend told me about an American company, owner of a famous brand, re-opening a manufacturing plant in the US where workers previously laid off when manufacturing moved offshore are being re-hired for a little more than the US minimum wage and for about 2/3 the price of the aforementioned baby sitting service!!

Something isn't right - my perhaps simplistic prescription for a sustained American recovery would be to resurrect manufacturing there which can only be done if the cost of living is reduced - the incremental cost of (some) labour would be the obvious place to start.

Why does this matter? Because the US will remain a major driver of global growth and investment for several years to come and a strong stable US economy and currency is therefore desirable.

An aside - they're fairly rigorous, to the point of sometimes being anal, about segregating trash that can be recycled - two bins right outside the garage where the SUV is parked ;-)

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