Starting with the bursting of the technology bubble in 2000, the fortunes of the US economy have waned. Since then, the US has seen two recessions with the last being the worst since the 1930s, a rising trend in unemployment, the bursting of a corporate debt bubble with the tech wreck and the bursting of a housing debt bubble with the sub-prime mortgage crisis. So it’s little wonder the US share market has been spinning its wheels in a secular bear market. Some commentators even talk of a permanent decline for the US.
The high level of US public debt, ongoing private sector deleveraging, less business friendly policies, demographic trends and the absence of extreme share market undervaluation suggest the secular bear market in US shares may not be over yet. That said, it would be dangerous to write the US off. Many did this in the 1970s only to see it roar back with a vengeance in the 1980s and 90s. More importantly, there are some signs of light at the end of the tunnel for the US in manufacturing, oil production and housing. This note takes a look at these sectors, focusing on the latter as housing was the original driver of the global fi nancial crisis.