Advantages
- US economic data has been rather strong at the end of the year 2011 and the beginning of the 2012 and is better than was expected. Job creation is picking up, and businesses are willing
to invest in new equipment to expand production. Improving labor market creates greater scope for consumption of households, whose consumption make up a large part of economy. World Bank projection is that US economy will grow
further by around 2.2% in 2012 and 2.4% in 2013. US manufacturing, consumer spending and continued growth from emerging market economies would be the drivers of economic activity.
- During the financial crisis and the subsequent recession US private sector companies were forced to go through a painful optimization process. The result today is that America’s private sector companies are more productive and efficient today – with record high profits and healthy balance sheets. Companies that are chosen for this investment deposit also have stable financial position which means that they can finance themselves more easily
and with better conditions from financial institutions and spend more money for business improvement.
- Companies involved in present offer are big multinational businesses that work around the world and receive part of their revenues from abroad, including emerging markets. Thus higher
growth, increasing wages and consumption in emerging countries are also beneficial for these companies as their results are improving from foreign activities.
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Risks
- US job growth is still too slow to make a meaningful drop in overall unemployment rate and increase labor income. Real income growth is flat, so it could negatively influence domestic consumer spending in the future, which may affect the financial results of companies through decrease in consumption.
- Slower growth in many advanced economies will mean lower demand for US exports and it could result in lower companies’ incomes.
- The outcome of the US presidential election could be the reason for investors, consumers and companies to be too cautious and limiting their spending. If there are too many involved in saving
and there is no money turnover, it could be one more reason for economical slowdown.
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