The US’s Global Power: Today and Tomorrow

Global power

We know that America is a superpower but in practical terms, what is its real contribution to the world economy? Given that the United States actually purchases over $500bn morethan it exports, the net contributionAmerica is making worldwide gives it a very impressive status within the international economy.  This also leads to an enhancement of Washington’s role as a world superpower.

This gives America heightened bargaining status vis-à-vis the coordination of global economic policy. And that is the most important assignment undertaken by G-20 summits – the address for the international economic forum. This year, come June – when America’s representatives head out to Japan for the meeting – America’s position will be stronger, especially vis-à-vis its capacity to reduce its trade deficits.

Furthermore, as soon as President Donald Trump pushed back the March 2nddeadline in the US-China trade dispute. There has been progressfrom both China and US in reaching a solution but as Oxford Economics Chief US Economist Gregory Daco cautioned:

“Popping the champagne today would be premature.  [The far-reaching disparity between the two nations] will prevent a significant de-escalation of trade tensions between the two giants.”

Indeed, if the end of year figures are anything to go by, the champagne bottle shouldn’t even be purchased yet. According to figures from last year, the fight to find a solution between the two nations “disrupt[ed] the global trading system and the cross-border production lines that businesses have built over recent decades.”  Plus, a recent National Association for Business Economics surveyfound that 75 percent of economists believe America’s economy will slump into a recession by 2021, the China-US trade war being cited as the main reason why.

US Economy 2018-2019: The Good, The Bad and the Ugly

Nasdaq

When reviewing America’s economic 2018 report, it is important to focus on the year in its entirety rather than look at what happened in the last month of the year. According to a recent interview held with NPR’s Scott Simon, it’s important to know this:

“The numbers for 2018 are good. The gross domestic product is growing. The U.S. economy is humming. But the numbers for December are bad. The Nasdaq, the Dow and the S&P all ended down yesterday.”

The US economy remains on its decade-long growth spurt.  It’s just that this month has seen some issues like: the partial government shutdown; continual drop in the stock market; increasing disarray in Trump’s administration; America’s trade war with China and more.  Oxford Economics Chief US Economist Gregory Daco however sees that the main attributes required for growth have not been impacted and thus we will continue to encounter expansion.  However, the stock market plunge could actually cause a domino effect with other issues.

So just because the economy took a bit of a nosedive in the third quarter should not put anyone into a panic. Growth remains on track to reach Trump’s 3 percent target for 2018 with a GDP increase at a 3.4% annualized rate (only a slight drop from the 3.5% October estimation). Still in the second quarter growth reached 4.2 percent.

Trump is blaming all of this on Jerome Powell and the hike in key short-term rate by the Federal Reserve tweeting that its officials “don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can’t score because he has no touch — he can’t putt!”