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Jeremy Grantham, a brilliant money manager and perpetual pessimist, recently wrote a note to clients called "Ten Quick Topics to Ruin Your Summer." It's a good read. There's weak GDP growth, global food shortages, and several other points to make you sweat when pondering the future.
Grantham focuses on the downside because, he writes, "good news will usually look after itself." He's right.
But pessimism outsells optimism in the media 10 to 1. And our emotional reaction to pessimism is lopsided by the same. The result is that many of us wander through a world that is constantly improving while getting bogged down by risks that are either phantom or temporary. Over the long run, missing out on what goes right is a bigger risk than people realize.
So, here are 10 quick topics to feel great about:
1. America has some of the best demographics in the world.
From now through 2050, America's population is forecast to rise by 50 million. China's will fall by 101 million. Russia's will decline by 10.3 million. Germany, down by 7.7 million. Italy, down 1.1 million. Finland, down 155,000. Greece, 600,000.
America ages well over the next few decades. Our young working-age generations grow, even as baby boomers retire.
Compare that to China. Its older generations swell, then die, leaving a shrinking population and collapsing workforce. South Korea is pretty awful, too. Japan is a retirement community.
2. Layoffs are at a record low.
Initial jobless claims recently hit the lowest level since 1973. That's great, but it's even better than it looks. The labor force is almost twice as large today as it was in 1973. Adjust initial jobless claims to account for the size of the labor force, and layoffs are at the lowest level in the last half-century. By a lot.
3. Investment fees have been slashed to the ground.
The only force more powerful than compound interest is the tyranny of compounding costs. The good news is that investment fees have plunged in the last two decades. According to recent report by Morningstar:
• Sixty-three percent of mutual funds and ETFs cut the expense ratios in the last five years.
• Since the early 1990s, average investment fees across all funds have declined by more than a third, from nearly 1 percent to 0.64 percent. On a $10,000 investment that earns 6 percent a year for 25 years, that's an extra $5,000 that goes to you, rather than advisers.
• Passive ETF fees now basically round to zero percent.
If the economy found a way to grow by an extra 0.35 percent a year forever, it would be considered a miracle. But investors have done just that. And given how competitive the industry has become, I doubt this trend is over.
4. Household formation is picking up.
A lot of the reason the economy was slow for the last five years is because household formation plunged. Young adults moved in with their parents. That meant they didn't need a new home. Since new home construction is a big economic driver, it was hard to get moving.
Now, things are changing. Household formation is at the highest level in a decade.
5. Things that used to be really deadly are way less deadly.
Motor vehicle deaths are down 60 percent. Heart disease deaths are down by half. Just these two mean more than a million people a year are alive who would have been dead just a few decades ago.
5. More people are saving for their own retirement.
People are living longer than ever, and public retirement systems are strained. The good news is that 401(k) participation is rising, and surging for young workers. According to a report by Wells Fargo:
"Participation in the 401(k) plan among millennials has reached 55 percent, compared to 45 percent in 2011. For newly hired eligible employees (meaning those who have reached the one-year mark of employment), participation has increased from 36 percent four years ago to 48 percent in 2015. In addition, employees in a pay range of $20,000 to $40,000 in salary are participating at a rate of 59 percent versus 47 percent four years ago."
6. Falling health care inflation will save the government hundreds of billions of dollars. In 2006, the Congressional Budget Office forecasted that by 2016, the average Medicare recipient would cost more than $15,000. The latest estimate is a little over $11,000. The amount of money this saves over previous estimates -- the estimates that led people to think the government was bankrupt and the dollar was heading for collapse -- is insane. The New York Times wrote last summer:
"The difference between the current estimate for Medicare's 2019 budget and the estimate for the 2019 budget four years ago is about $95 billion. That sum is greater than the government is expected to spend that year on unemployment insurance, welfare and Amtrak -- combined.
7. Student loan borrowing is declining.
Thanks to a clamp-down on for-profit schools -- where so much student debt came from -- students aren't borrowing as much as they used to. The Wall Street Journal reported in November 2014:
"Federal and private-loan lending totaled $106 billion for the 2013-14 academic year, down 8 percent from the prior year, according to a report released this week by the nonprofit College Board. The decline marks a significant reversal in borrowing, which peaked at $122.1 billion in 2010-11 after rising for years."
8. High school graduation rates are at a record high.
This is the knowledge economy, where education, connections and ideas are more important than any time in history. From U.S. News & World Report in February:
"More American students are graduating from high school than ever before, according to new data from the Department of Education."
The national graduation rate hit a record high of 81 percent in the 2012-13 school year, the data shows.
9. Childhood obesity rates are falling off a cliff.
Something is clearly going right here, as indicated in this 2014 report from The New York Times, and it bodes well for future health care costs:
"Federal health authorities on Tuesday reported a 43 percent drop in the obesity rate among 2- to 5-year-old children over the past decade, the first broad decline in an epidemic that often leads to lifelong struggles with weight and higher risks for cancer, heart disease and stroke.
"The drop emerged from a major federal health survey that experts say is the gold standard for evidence on what Americans weigh. The trend came as a welcome surprise to researchers. New evidence has shown that obesity takes hold young: Children who are overweight or obese at 3 to 5 years old are five times as likely to be overweight or obese as adults."
10. 2008 was the worst financial crisis in nearly 100 years. Seven years later, unemployment is 5.3 percent, the stock market is at an all-time high, the dollar is surging, inflation is low and oil output is the highest in decades.
That's a good indication of how adaptive and resilient the U.S. economy is. It's like we got stage-4 brain cancer and ran a marathon a few years later. If we can go through 2008 and bounce back as fast as we did, run-of-the-mill recessions shouldn't worry you at all. Keep this in mind when forecasting doom.
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Morgan Housel, a columnist at The Motley Fool, is a two-time winner, Best in Business award, Society of American Business Editors and Writers and Best in Business 2012, Columbia Journalism Review.
