Just because each country is tracing the same sickly line doesn’t mean we’re all suffering from similar maladies. Europe is uniquely constrained by a common currency that’s working well for nobody. Australia is battling a Chinese slowdown. The U.S. is proving that it’s hard to grow without a housing market.
These crises are wide-ranging, but the upshot is that the world economy needs a power engine. After the Great Recession, China passed a monster stimulus, Brazil went right ahead with its borrowing, and world trade was surprising buoyant considering the scale the global housing and equity meltdown. That’s one reason why export growth returned so quickly to the U.S., Canada, and Europe. But today, every strong economy is getting weaker at the same time, and when you look around the world, it’s hard to see an emergency booster engine lying in wait.
As the WSJ beautifully graphed today, the odds of a recession are climbing everywhere and the expectations for growth are falling everywhere. In fact, if any country is likely to provide a surprising boost to the world economy in the next year, it’s … right here, in the U.S., where residential investment finally seems ready to climb out of its five year hole and improve the earnings and spirits of the world’s most largest national engine of consumption. For the world’s sake, we should hope for a housing recovery very, very soon.
*Brookings methodology [pdf]: Overall growth = Business Confidence, Consumer Confidence, Employment, Exports, Imports, Industrial Production, GDP Growth, Equity Markets, Credit Growth, Ted Spread (difference between the interest rates on interbank loans and short-term U.S. government debt).
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There need to be a recovery of the global economy, where incomes increase and confidence returns to the markets, the imperfections need to be resolved without a fiscal cliff that will crash the markets, goal setting would be a method to achieve goals instead of GDP which does not solve the fundamentals of chasing money, population growth, a better lifestyle and security by solving healthcare and the aging population are reasons where there is a guaranteed retirement plan for the future. When all conditions are met, the risks of failure will all be taken away and we shall return to booming times without a concern about GDP growth anymore.
Play games with me and everybody suffers.
– Contributed by Oogle.