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Jan. 9, 2012—The new year got off to a pretty strong start in the United States, economically speaking. Not long after the ball dropped in Manhattan’s Time Square, ringing in the arrival of 2012, reports came in that manufacturing had grown last December at the fastest pace in six months, and that unemployment had dropped to 8.5 percent—its lowest level in almost three years. Construction of new housing is up, and so is consumer confidence.

The U.S. stock market closed up on the first day of trading, and when that happens, stocks are almost always up for the year. Still, the U.S. economy is hardly booming—housing construction is about half of what it should be, for example—and there are some worrying signs that the sovereign debt crisis will have a major impact on this year’s economic growth in the region. In addition, China’s manufacturing sector is slowing down.

The biggest concern is that consumers worldwide are still loaded with debt, and will not be spending aggressively any time soon. In the United States, 70 percent of the economy is tied to consumer spending, so it’s likely to be another year of modest growth for most companies.

Smart companies are planning to use this period to boost efficiencies—not just to improve the bottom line, but also to enhance competitiveness for when the economy does inevitably grow. Others are saying that they can’t invest because their margins are under pressure. I think it’s a mistake to sacrifice long-term competitiveness for short-term profitability—and it’s not necessarily an “either/or” choice. Companies can invest in RFID and other new technologies, and still maintain profitability.

The US overtook China to regain top position as the world’s leading investor in “clean” energy last year, thanks to the Obama administration’s subsidy programme, according to Bloomberg New Energy Finance, a research company.

It was the first year since 2008 that the US has been ahead of China as the world’s largest market for investment in renewable energy, biofuels and energy efficiency.

However, it may drop back again this year after the end of two key subsidy programmes introduced as part of the 2009 economic stimulus package: grants for renewable energy projects and government loan guarantees to encourage private sector investment.

Analysts and investors said the future of global clean energy investment depended on bringing down costs to the point where technologies such as solar and wind power could compete against fossil fuels without subsidy.

In spite of the turbulence in the world economy and the continuing failure to reach a global agreement to curb greenhouse gas emissions, worldwide investment in clean energy rose 5 per cent to a record at $260bn, according to Bloomberg NEF.

The US had fallen behind China because of the effects of the financial crisis, which came at a time when Beijing committed to a huge rise in investment in renewables to cut pollution and strengthen energy security.

Last year, however, investment in the US rose 33 per cent to $55.9bn, while in China it was broadly unchanged at $47.4bn. After spectacular growth in plants for manufacturing wind turbines and solar panels, causing global overcapacity, China applied the brakes last year.

Ethan Zindler, of Bloomberg NEF, said subsidy cuts meant that investment was likely to fall this year. However, he added, the falling cost of renewable energy was close to making it competitive with fossil fuels.

“We are on the verge of a turning a corner where in the next five to seven years or so, subsidy will be much less important for clean energy investment,” he said.

The 2011 growth in investment in renewable energy was led by solar power. Globally, solar investment was up 36 per cent, and at $137bn represented more than a half of all clean energy investment. Over-capacity has caused prices of solar panels to fall sharply, making solar power a more competitive option for power generation.

Kevin Parker of Deutsche Bank Asset Management said: “We are on our way to the point where solar power costs the same as fossil fuel power, and it’s not that far away. When we get there, there’s going to be a lot of money to be made by the leaders in the solar industry.”

Wind power had a difficult year in 2011, with a 17 per cent drop in global investment.

Vestas, the world’s largest wind turbine maker, said yesterday it would cut 10 per cent of its workforce and close at least one factory to shave €150m off annual costs. The Danish company, which issued two profit warnings in recent months as it battled production delays, said the global economic downturn and any withdrawal of US subsidies would hit it hard in 2013.

The clean energy investment figures were announced at a meeting attended by 450 fund managers at the United Nations in New York, intended to encourage investment in renewable energy and other technologies that curb greenhouse gas emissions.

Mr Parker said it would be a “dereliction of duty” for fund managers to sign up to take into account the risks of climate change, but fail to take actions to manage that risk.