Attention market bears: Liz Ann Sonders is bullish on America.

Charles Schwab & Co.'s chief investment strategist has been telling investors lately that the U.S. is truly undergoing a manufacturing and energy renaissance, particularly in recently depressed Midwestern states such as North Dakota, Sonders said in a keynote address on Tuesday before the Financial Planning Association's New York chapter.

“Someone asked me in a Q&A, 'What's your favorite emerging market?' and 'Middle America' was what came out of my mouth,” said Sonders at FPA-New York's annual summit. “Now when I'm asked what's my favorite emerging market, I answer Middle America.”

Thanks to this renaissance, U.S. is “not just paper wealth” anymore, she said, predicting that U.S. household net worth would hit an all-time high in 2013.

For every 100 jobs created in petroleum refining, another 1,190 additional related jobs are created, Sonders noted. Further, she recalled a recent trip to China, where several representatives of the American Chamber of Commerce in China told her: “We think over the next 10 years, we'll be bringing our business back to the U.S.”

The Boston Consulting Group has been at the forefront of predicting this trend, Sonders said, with its publication of “Made in America, Again: Why Manufacturing Will Return to the U.S.” two years ago. Boston Consulting believes that China's once-overwhelming manufacturing-cost advantage over the United States is eroding fast.

U.S. strengths include a high rate of productivity, the rule of law, relatively cheap real estate, low transport costs and low-cost energy, and restrained labor costs versus emerging-market wage increases, Sonders noted. “It's an unbelievably powerful trend,” she said.

Even though U.S. wage increases are weak, consumer spending is up 3.5%, at 71% of GDP, because households have been deleveraging over the last five years, Sonders said. Americans can afford to spend again, she said, adding that the bull market in U.S. stocks also has been going on for the last five years.

“It is shocking that four years into a bull market we still have massive outflows out of equity. I'm amazed at how much skepticism I'm still met with after four years,” Sonders said. “I'm not a permabull, but I'm optimistic. At conferences, almost all the questions are bearish. I love that because I'm a contrarian.”

This article was originally posted at AdvisorOne.com, a sister site of Credit Union Times.

Instant Insights /

Middle America is Favorite Emerging Market for Schwab Chief Investment Strategist

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