As I’ve met with investors and their financial advisors over the past few years, I think the most commonly asked questions have been some riff on the theme of “what terrible thing is going to happen next?” We’ve certainly had enough nasty surprises to make that point of view highly understandable. And the media and political debate don’t help. After all, saying “things will be fine, don’t worry” doesn’t attract many viewers, reader or voters. In hopes that I won’t lose too many readers, I want to point out two promising phenomena that might produce a stream of good news over the next several years.
When I travelled to a client meeting in western Pennsylvania a few months ago, I couldn’t miss the up-beat talk about the effect shale gas production was having on local business. More recently, on a similar trip to the Dallas-Fort Worth (DFW) area, I kept hearing how revenues from gas wells at DFW were going to soon exceed landing fees at one of the world’s busiest airports. Anecdotes, sure, but the real surprise came from a report that during 2011 the U.S. became a net exporter of petroleum products for the first time since 1949 (incidentally the year in ancient history when I was born). For those of us who’ve lived, and are living through repeated energy price shocks, the prospect of at least partial energy autarky is encouraging indeed.
What makes domestic natural gas production especially encouraging is its connection with a second development, the resurgence of U.S. manufacturing. Combined cheap and plentiful industrial fuel and chemical feedstock from natural gas with rising labor costs in emerging economies, a reasonably valued currency, and an adaptive corporate culture, have led to manufacturing employment numbers that are increasing faster than overall employment for the first time since the 1970s. Those manufacturing jobs are especially valuable because each new manufacturing job creates about three jobs for other workers, substantially more than other sectors.
I’m aware of the limitations of this good news. After all “good producing” employs only about 18.3 million out of 132.5 million non-farm workers, and the U.S. is unlikely to become the mass production manufacturer it once was. I’m also aware of the environmental issues, especially regarding air and water contamination, that rightly or wrongly surround and will somewhat limit fracking. But the revival of the U.S. as a home for manufacturing and energy production is good news that we should not overlook.
 Citi GPS, “Energy 2020: North America, the New Middle East?” March 20, 2012.
 ISI, “Investing in US Manufacturing Renaissance,” March 5, 2012.
 Bureau of Labor Statistics, March, 2010