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Hewison Private Wealth - Insights
Hewison Insights
Jonathan Pain


Andrew Hewison
Managing Director
3 Mar 2014

This was the statement made by well-known economist Jonathan Pain at a conference I attended some five years ago. Let’s be truthful, back then you couldn’t have blamed him.

China’s economy was growing in the mid-teens per annum and the U.S had just been held responsible for the biggest financial meltdown since the great depression in the 30’s.

Pain was a strong advocate of the “de-coupling” of Australia’s economy away from the U.S. The old adage, “The U.S sneezes and Australia catches a cold” was dead. Instead, within a few years we would track China instead.

China is a powerhouse, make no mistake. If they sneeze, the U.S will catch a cold and we will contract the FLU! Thankfully, although winter is on the horizon, China does not look like sneezing anytime soon. They continue to grow steadily at around 7% per annum.

The U.S has re-invented itself, again.

You have to hand it to them; they have a knack of doing so. The drivers of the recovery have been an energy boom, a manufacturing renaissance and American innovation.
The U.S’s biggest issue in the wake of the global financial crisis was their spiralling debt. Throughout last year we were exposed to their ongoing political ‘debt ceiling’ issues. However, the U.S budget deficit has shrunk from more than 10% of Gross Domestic Product (GDP) in 2009 to less than 3% of GDP this year. Through varied measures the U.S will make $US4 trillion in spending cuts over the next 10 years.

Some key facts to consider about the U.S and future growth opportunities:

  • It’s estimated that by 2020, the U.S will be the world’s largest oil producer.
  • Due to lower energy costs, a declined USD and very low labour costs, manufacturing in the U.S is expanding. For example, Apple plan to bring some manufacturing home and Honda plan to build a super car on U.S soil.
  • The bulk of new gadgets are developed in the U.S. Since 1975, only one Eurozone company joined the world’s top 500, whereas 26 have come from the U.S.
  • The strength of the U.S economy has strengthened the argument that the world’s global markets have entered a new secular bull market.

Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.