Wednesday, October 10, 2012

America is the bright spot of the global economy

The S&P 500 since Obama's inauguration

Arguing about an alternative reality is futile. No matter how many studies conclude that the economic stimulus worked, it will never put a human face on the problem. Baselines will be disputed. It quickly devolves into a he-said, she-said debate, where people don't know what to conclude because the feelings (not the facts) are unclear. The cure, which might be apparent, is not believed because no one can imagine the depths of the disease.

The argument needs to change in order to compare to another baseline. One where human misery and success has a face. Simply put, how is the United States doing compared to the rest of the world?

On that, America is doing fairly well. The IMF cut its global outlook but rose its GDP growth estimates for the US to 2.2 percent for 2013. In addition, Job growth in the US was a lot faster than early estimates. Still not great, but better than many other nations who are still struggling through recession. The IMF calls for American leadership to prevent another global recession.  To do so, America must avoid its "fiscal cliff" by addressing the long term debt in the future rather than today. It is premature to address the issue while unemployment is still around 8 percent.

The Eurozone is bogged down with internal negotiations of how to fiscally consolidate in order to prevent the break up of the Euro, which will cause a continent-wide prolonged depression. Until those details get figured out, the economy is barely trudging along - with most analysts saying that Europe is currently experiencing a mild recession and its intensifying. Through austerity and monetary easing, Europe will eventually solve its problems. The PIIGS - Portugal, Ireland, Italy, Greece, and Spain - will experience readjustment pains for the foreseeable future, which will hold down Europe as a whole as a source of growth. Europe can't lead the world until they figure out their own internal struggles.

Growth in the developing world is slowing down as well. Some say it is hitting a wall. The BRICs - Brazil, Russia, India, and China - each face unique problems that prevent them growing much further. Issues ranging from poor infrastructure to unstable political leadership to severe inequality prevent these countries from taking a front and center leadership role in the world stage. Again, too many internal issues to worry about external affairs.

Who does that leave to lead? America. Not that the US doesn't have its own fair share of problems, but they pale in comparison to the rest of the world. Some might say: The US economy is the envy of the world.

Obama's slogan is missing a piece: "Bin Laden is dead, GM is alive, and America is the bright spot of the global economy."

For once, it gives America a reason to feel good about itself.

Hope restored.

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