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...I thought
the experts said the U.S. was decoupling from the rest of the world --
"Europe
Imperils U.S. Sales From Chemicals to PCs: Economy" (BusinessWeek)
American
exporters from Dow Chemical Co. to Hewlett-Packard Co. are preparing for a
further decline in demand from Europe as the region’s deepening debt
crisis threatens to derail a source of strength for the U.S. economy.
JPMorgan Chase
& Co. cut its forecast for second-quarter growth to 2 percent from 2.5
percent last week, in part because of a deteriorating trade balance. Earlier
this month, it lowered its third-quarter estimate to 2 percent from 3
percent, “with much of the downward revision accounted for by an
expectation that the pace of export growth will slow,” chief U.S.
economist Michael Feroli said in a June 1 research
note.
U.S. exports to
the 27-nation European Union dropped 4.8 percent in the year ended April, the
worst 12-month performance since November 2009, Commerce Department figures
show. By comparison, total U.S. exports were up 3 percent in April from the
same time last year. The slump in Europe coincides with slowing growth in
other major markets for U.S. goods, such as China and Brazil.
“The
decline in Europe will weaken our exports over the long term,” said
Michelle Meyer, a senior U.S. economist at Bank of America Corp. in New York.
“We look for the trade deficit to widen not only to the euro zone but
developing economies as well,” she said, consistent with their forecast
that the U.S. economy will slow to just 1 percent growth by year-end from the
1.9 percent annual pace in the first quarter. --
...and that
deficit spending would help our economy --
"Study:
Long-Term Deficits Are Linked to 24 Percent Lower Growth" (The
Washington Post)
What’s
the real harm of a massive government deficit? Carmen Reinhart, Vincent
Reinhart, and Kenneth Rogoff find that high public
debt is associated with a significantly lower level of GDP in the long run.
In a new paper
for the National Bureau of Economic Research, the researchers examined the
historical incidence of high government debt levels in advanced economies
since 1800, examining 26 different “debt overhang episodes” when
public debt levels were above 90 percent for at least five years.
The National
Debt Clock. (Andrew Burton/GETTY IMAGES) The debt episodes included
everything from Netherlands’ Napoleonic War debts and the Japan banking
crisis of the 1990s to Greece’s current fiscal crisis. On average, the
researchers found that growth during these periods of high debt were 1.2
percent lower on average, consistent with Reinhart and Rogoff’s
findings in 2010. What they also found, however, was these episodes of high
debt and lower growth were quite lengthy, averaging 23 years. And the
accompanying long-term drag on GDP was substantial. “By the end of the
median episode, the level of output is nearly a quarter below that predicted
by the trend in lower-debt periods,” they explain. --
...and that our
economy was on the mend?
"The
Hill Poll: Voters Fear US Could Slip into a Double-Dip Recession" (The
Hill)
A massive
majority of likely voters fear America could be slipping into a second
economic downturn just four years after the Great Recession, according to a
new poll for The Hill.
...
Amid worrisome
jobs numbers and the looming threat of a eurozone
crisis, the survey found 75 percent of people were either very or somewhat
worried the country is headed toward another recession.
Among those
concerned, 46 percent said they were “very” worried and 29
percent said they were “somewhat” worried.
I guess all
those "experts" are...but-heads?
Michael J. Panzner
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