Exporting America's Travails

Issue 02-04-08   |   Reviewer:   Robert A. Clark, MBA, Ph.D.

Abstract

The United States has long dominated the global economy, and any recession in the U.S. has been felt even harder abroad. With the new emergence of China and India, however, the economies may be decoupling. 

Trade has been a strong booster for the U.S. economy.  It has added 0.5 percent to growth per quarter over the past two years.  Recent financial market turmoil has illustrated that the markets are still linked. The Fed's surprise 75 basis point rate cut was a direct result of global market turmoil.  Global growth is holding up, but there are signs of strain in Europe. Japanese growth is soft, with exports down for the past three months.  Mexico's output has slowed, and Canada is cutting rates to spur growth.  Trade to developing nations will be somewhat isolated from the growth issues in the developed economy, and nearly half of U.S. exports go to developing countries.  China's growth will slow a bit, but it will still provide a valuable market for the U.S. As the world's largest exporter and importer, the U.S. has a major role in the global economy. To date, the employment picture has not pointed to a recession but rather a slowdown.




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