The Fate of the U.S. and Globalization

The United Kingdom released its latest quarterly GDP figures over the last 11 quarters on 12/22/2011.

More than anything else it shows, once again, how intertwined the economies of Europe and the United States are. What happens in one happens in the other.

We need these little reminders to keep an accurate perspective on the U.S. economy and our federal government’s economic policy.

Comparing the U.K. and U.S. Economies

UK GDP Growth Q4-2008 through Q2-2011

U.S. GDP Growth Q4-2008 to Q2-2011 (Source: BEA)

The scale difference between graphics makes it a bit harder to see, but if you look at both it is pretty clear they share these common characteristics:

  • Took a huge hit in Q4 of 2008
  • Made a comeback in 2009
  • Petered out in late 2010
  • Started a weak comeback in 2011

In other words, the economies of both the United States and the United Kingdom are synched.

For those smugly thinking its a one-way dependency with the U.K. the weak sister, then just take a look at the eurozone economy.

Conclusions

There is almost no good economic news to look forward to in 2012 anywhere in the world. Few economists are optimistic.

Here are some of the reasons:

  • The Fed is pretty much maxed out on what it can do
  • The ECB is pretty much maxed out on what it can do
  • The eurozone economy is in a shambles
  • Even China and other Asian economies are contracting now
  • The U.S. continues deficit spending like a drunken sailor

There aren’t any good ideas left to improve things that haven’t already been tried.

The economic watchword is that it will be 2013 before there will be any significant turnaround. Even that might be wishful thinking.

There are hopeful signs in the U.S. economy. However, they are nothing to get overly excited about.

One of the few true bright spots for the U.S. is the U.S. dollar remains strong globally. But that is only because the rest of the world is in such terrible shape that it is practically forced to buy U.S. treasury securities to fund its own debt or park its spare cash.

Should global investors find another pot of gold at the end of the rainbow to draw from, then because of our extraordinarily high deficits, the United States economy is toast!

The United States better get it’s act together soon, or will find itself a 3rd world economic power faster than you can say, “American Exceptionalism“!

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About azleader

Learning to see life more clearly... one image at a time!

Posted on Dec 30, 2011, in economics, Economy, eurozone, GDP, Global Economy, news, Politics, U.S. Economy, United Kingdom, World Economy. Bookmark the permalink. Leave a comment.

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