America vs the World, 1-0
While other countries and major economic areas are expected
to falter, the United States is expected to improve. The lower worldwide gas
prices and interest rates have actually been boosting the American economy. The
economy relies less on trade and world’s misfortunes help, by the low interest
rates and oil prices. The US GDP consists of only 13% exports which is less
than the OECD countries and the euro zone has only a mild effect on the
economy. Projections show that repercussions of fall in the euro zone will
decrease the growth rates of Britain, Japan, and China more than America.
With looser monetary policy, the currencies of other
countries have decreased while the USD has increased 6% which has only
benefited the US dollar. The deflation in other countries has increased the borrowing
rate in the US thus improving housing prices. However, if another crisis was
too occur consumer confidence would fall too low and raise the real interest
rates. The Fed wouldn’t be able to lower the nominal rates thus meaning a
hoarding of cash by people.
This article is building off the recent success the US
economy has been able to sustain. All is well now and looks great for future
outlook, but if another crisis was too occur, we would be more vulnerable to a larger
impact. All seems well now but a recent trend can be here or starting soon that
could bust the US economy again.
This article appears to be in agreement with what Ian Sheldon was saying at the Economic Outlook Conference. According to Dr. Sheldon, the United States is doing much better economically than most EU countries. To make this comparison, Dr. Sheldon centered his analysis around the question “just tired, or really sick?” He concluded that when it comes to secular stagnation, the United States may just be suffering from hypochondria. Europe, on the other hand, may actually be really sick. Unlike the U.S., Europe has less favorable demographics and lower productivity growth.
ReplyDeleteI agree, the european economy as a whole has not been able to perform or really bounce back after the recession. However selected countries in Europe like Germany are doing very well compared to their counterparts. We tend to generalize Europe and Europe's economy but since it's made up of many smaller countries with such diverse economies it makes sense to look a little deeper.
ReplyDeleteAn annual growth rate in the US of 2% is sustainable and is better than the vicious cycles in the past. The EU and China are not in immediate danger. They import millions of barrels of oil everyday and the recent drop in oil prices will equate to large savings. Inflation could be a good thing if US stimulus has positive effects. The US should focus on projects such as infrastructure improvements to increase investment.
ReplyDeleteOne must wonder whether or not America would be able to sustain this though. And it seems as if Europe has a lower level of productivity growth although i feel as if other demographics need to be taken into consideration.
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