So once again, US and World Economy is under dark clouds. This time, it’s not US per se, the engine of World economy, but multiple intermediate blocks that have a high potential for creating serious dips along the global supply chain for the coalescing one village economy.
Chinese economy is down for multiple reasons (read McKinsey’s glaring report in their recent article), Multicomponent European Union, BRICS, Asia Pacific-Oceania and NAFTA all have discouraging, if not overtly negative news.
In EU, major players Germany, UK and France are-already reeling under serious GDP decline, while others are sagging the Euro down for some time now. Oceania, with reference to Japan, NZ and some extent Australia are not showing impressive trend lines and amongst the BRICS, Brazil and Russia, (China is already mentioned) are significantly impacted, just with a glimmer of hope from South America and a shining armor from India.
A strong and resurgent dollar is no good for US, as it helps to magnify the increasing trade deficit gap with trading partners. There are several signs of US economy having bounced back, but there is a lurking fear of deep seated impact of constitutive easing. A solid indicator is job market and the unemployment is significantly low, as close to pre-recession and the housing index (new and old) are both strongly supportive along with several other zig saw pieces that support the current economic buoyancy. Foremost amongst that is the Obama strategy with a realization that the emerging world order has multiple players and a self-committed urge to stay away from large scale confrontation and military expeditions. That’s a trillion dollar saver!
Yes, war’s boost economy but they consume current, life and create hatred plus reactionary self-assertion. Finally, policy executioners might have realized the cost benefit ration and the folly of using war for promoting economy.
How far will it help US and Global Economy? Well, unlike the 2008-2012 major recession where the Engine stalled because of subprime and other defaults, this time around the train may be stopped by the intermediate compartments.
(the above was written on Feb 27, 2016 and uploaded in Oct 2016).