Don't Worry ... Be Happy ... THE GLASS IS AT LEAST HALF FULL

Let's ask ourselves the following question as we begin 2013:

Should we view the economic outlook and "glass" as half empty or as at least half full?

My own view is that it's more than half full, and my reasoning is summarized below.

The Negatives Are Plentiful

First, the bad stuff. Consumer confidence is low, the aristocrats in government have had no clue or even intention to do the right thing on behalf of We the People, unemployment is high, U.S.economic growth is slow, the rest of the world's economies are weak, and deficits and debts are at historical highs. Lots to worry about as we begin 2013.

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Consumer sentiment declines in January captures the prevalent mood of gloom and doom in America these days:

"Led by gloomier views on current conditions, a gauge of consumer sentiment declined in January, hitting the lowest level since December 2011, according to a Friday report from the University of Michigan-Thomson Reuters.

The consumer-sentiment gauge declined to 71.3 in a preliminary January reading from a final December level of 72.9.

Economists polled by MarketWatch had expected a preliminary January reading of 74.2, with concern lingering over remaining major fiscal issues, such as the debt ceiling. January’s decline follows a plunge in December, when consumers were worried about the fiscal cliff. It can be tougher to rebuild than lose confidence.

“The deterioration in sentiment is a stark reminder of the debilitating impact that the ongoing uncertainty created by the political dysfunction in Washington is having on households' mood,” wrote Millan Mulraine, a macro strategist at TD Securities, in a research note. “If the uncertainty persists and confidence deteriorates further, it is likely to have a more lasting dampening effect on spending.”

The sentiment gauge, which covers how consumers view their personal finances as well as business and buying conditions, averaged about 87 in the year before the most recent recession. Economists watch sentiment data to get a feel for the direction of consumer spending.

UMich’s gauge of consumers’ views on current conditions fell to 84.8 in early January from 87 at the end of December. Meanwhile, a barometer of consumers’ expectations fell to 62.7 from 63.8. Higher payroll taxes are likely weighing on consumers’ moods, analysts said.

“The continued fiscal policy uncertainty could keep confidence depressed for the next few months relative to the levels in October and November,” Barclays analysts wrote in a research note prior to the data’s release."

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The Positives Are Also Plentiful

Our nation's politicians are finally coming to the conclusion that We the People are fed up with their childish and self centered behavior concerning our government's wasteful spending, deficits and debt issues. They may actually begin to address these problems this year.

Our U.S. economy is on the mend.

Housing has bottomed, energy costs are stable to declining and consumer spending may be strengthening somewhat.

Corporate earnings being reported are reasonably strong.

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GE, a bellwether for the world's economic condition and outlook, painted a reasonably sanguine picture today when reporting 2012's earnings.

In GE's Profit Rises 7.5%, CEO Jeff Immelt struck a somewhat optimistic and confident note about his company's performance and prospects:

"Overall, Chief Executive Jeff Immelt called the global economy mixed but said GE is well positioned for 2013, and he stood by the company's previous growth targets. He noted that the Chinese economy strengthened at the end of 2012 and said he expects the trend to continue.

"We saw real strength in the emerging markets, and the developed markets stabilized," Mr. Immelt said. . . .

Mr. Immelt described the conglomerate's order rate as "lumpy" during the quarter and said it remains too soon "to call victory." Still, "the momentum built during the quarter," he said....

GE's industrial businesses, which it has been counting on to drive growth as it shrinks its GE Capital finance arm, also showed improvement. GE's industrial margin finished the year at 15.1%, in line with Mr. Immelt's forecast for a 0.3-percentage-point gain from about 14.8% for 2011. The company has vowed to grow the margin another 0.7 percentage points this year.

The company has been working to rebuild investor confidence following its dividend cuts in the wake of the 2008 financial crisis, many of which stemmed from losses and write-offs at GE Capital. . . .

GE reiterated that it is planning for industrial organic revenue growth—which excludes the impact of acquisitions—of 2% to 6% in 2013."

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And There Are More Positives To Consider

Inflation is and will remain subdued as energy prices remain stable, if not declining.

And domestic energy independence should become more of a priority for our nation now that the election of 2012 is behind us.

Meanwhile, even the government knows best gang shows signs of acting less irresponsibly about self imposed fiscal cliffs, debt ceilings and the like.

Any show of bipartisan problem solving behavior would be welcome and unexpected by We the People and undoubtedly help instill greater consumer confidence in the years ahead. Although perhaps I'm being naive about this, that's what I see happening.

And around the globe, Europe, Japan and China are all showing clear signs of demonstrable economic bottoming, stability and improvement as well.

Summing Up

So despite all the bad news out there, I'm taking a confident "Don't worry; Be happy" approach to 2013 and beyond. I recommend that you consider doing so as well.

If nothing else happens, at least we'll smile more. And that may prove to be contagious to those around us.

We'll be updating this "glass is more than half full" point of view in future posts, but I wanted to share my growing level of confidence in our country's prospects for the good times that lie ahead.

Besides, somebody has to start believing that we still are who we always have been as We the People.

While we still have lots of problems to solve to create the millions of private sector jobs that are very much needed, I'm betting on that to happen in the next several years as we all learn anew (even the big spenders in government) that spending money we don't have can't continue forever.

So to repeat, Don't worry; be happy.

THE GLASS IS AT LEAST HALF FULL.

Thanks. Bob.