Coming To America Six reasons global capital is looking to the US

Despite recent challenges, the US is proving more resilient than expected. Its economy looks set to continue growing at a slow but steady pace, outstripping other major economies. Some key factors attracting the attention of global investors now:

Improving Finances

US budget situation has improved

  • Tax revenue is up, fueled by strong corporate profits and better job market
  • Reductions in gov't spending (federal, state and local)

Federal, State and Local Tax Receipts - 2003 to 2013 ($ Bn)

Sources: Bloomberg, US Census Bureau The graph above is for illustrative purposes only and is not reflective of an actual investment.

Resilient Consumers

Personal consumption accounts for 70% of the US economy

  • Retail sales are up 27.5% since the March 2009 low
  • Consumer credit is expanding
  • Household net worth rising, driven by higher home and financial asset prices

US Retail Sales, Jan 2003 – June 2013

Source: US Census Bureau. The graph above is for illustrative purposes only and is not reflective of an actual investment.

Housing Recovery

  • Home sales have quickened from a year ago
  • Inventory of existing and new homes is still low
  • Potential good news for the beleaguered US construction industry

New home sales, inventory and # of months' supply, July 2007 - June 2013

Source: US Census Bureau. The graph above is for illustrative purposes only and is not reflective of an actual investment.1

Energy Boom

  • US crude oil production is heading toward its highest level in 20 years
  • Natural gas output is setting new records
  • Both could boost job growth and help reduce the US trade deficit

US Crude Oil & Natural Gas Rolling 12-month Production: Feb 1993-Feb 2013

Source: US Energy Information Administration (EIA). The graph above is for illustrative purposes only and is not reflective of an actual investment.1

Manufacturing Renaissance

Increased production of durable goods, driven by:

  • "Repatriation" of US manufacturing and US technological innovation
  • Reduced domestic energy costs
  • Rising labor costs in Asia

US consumer durable goods production, 2001-2013 (Index)

Source: US Federal Reserve The graph above is for illustrative purposes only and is not reflective of an actual investment.1

Valuation Momentum

P/E (price per earnings) multiple is up this year; why?

  • Optimism about the US and US companies' future earnings
  • Increasing demand for US equities from global investors
  • More favorable view of equities relative to other asset classes

S&P 500 trailing 12-month operating earnings per share and P/E ratio

Source: S&P, as of 7/12/13. This information cannot be guaranteed and all liability is disclaimed on S&P's own behalf and on behalf of its information providers for any damages or losses arising from any use of this information.1

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