Global Economy and the United States
Our fearless leader (who never had much to fear in his lifetime) is recasting the economics of this nation more to his liking. There may(?) have been a time year (decades?) ago when doing so would not be much of an issue. This due to the United States economic size and power globally after WWII.
Things have changed greatly since then. The global economy has caught up with the United States. I tend to believe this bubble will not last much longer and we are in for a downside.
Just some observations. What others are seeing.
~~~~~~~
“Statistically, what does early-year U.S. underperformance indicate? That depends.
Unfolding against a backdrop of steady earnings growth and stable U.S. institutions and foreign relations, the U.S. market often recovers into positive territory, delivering gains for the year.
In more volatile conditions, returns become harder to predict, and “volatile” likely better describes U.S. conditions right now. As President Donald Trump considers withdrawing from trade agreements, weighs further tariffs on major trading partners, threatens European powers with annexation of territories, and exerts unprecedented pressure on key U.S. institutions like the Federal Reserve, macro and domestic outcomes become far harder to predict.
What’s more, fragmenting trade patterns can spur domestic growth in mature economies across Europe and Asia as countries move away from U.S. imports and focus on producing goods and services more locally. Changing patterns can also spur increased trade that cuts out the U.S. as a source or intermediary. Over time, this can translate to strong market performance within countries. But such effects are difficult to judge over several months.
In this context, the “Ex-America” trade may not be mere seasonal noise, but preliminary evidence that global capital is rethinking concentration risk after a decade of U.S. dominance.“
~~~~~~~
“US economy: an exceptional boom or a bubble to burst?” CADTM
“productivity growth the US is rapidly outstripping almost all advanced economies, many of which are caught in a spiral of low growth, weakening living standards, strained public finances and impaired geopolitical influence.”
The problem with this narrative is that it is all relative. Note the title of article: why America’s economy is soaring – ahead of its rivals. The US economy is soaring, wait… but only ahead of its rivals. Yes, compared to Europe and the rest of the advanced capitalist economies (of course, not compared to China or India), the US is doing much better. But that’s because Europe, Japan, Canada are stagnating and even in outright recession. In historic terms, the US economy is doing worse than in the 2010s and worse again compared to the 2000s.
But if you look closely at the trajectory of the US productivity growth line, you can see that from about 2010, productivity growth in the US has been slowing. Its relative outperformance is entirely due the collapse of growth in the rest of the G7. As the FT article puts it: “Data from the Conference Board shows that, in the past few years, labour productivity has dropped relative to that of the US in most advanced economies.” Yes, relative to the US, but labour productivity growth in the US is slowing down too, if by not so much.