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Why the U.S. will power the world economy in 2015

29 Comments
By CHRISTOPHER S. RUGABER

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29 Comments
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Laguna, take a history class. The US defaulted in the 1790s. We have too many problems to survive long-term. Like I keep saying, when Social Security and Medicare finally run dry and millions of people are dying in the streets, what then?

1 ( +1 / -0 )

"And don't forget that we don't have Barney Frank and Chris Dodd to allow the Banks to give out low interest loans, Which was one of the major causes of the collapse it should be ok."

The subprime institutions were unregulated while Wall St created the toxic debt instruments behind closed doors. The cause of the crisis was an unregulated or lightly regulated private sector that willfully engaged in reckless and opaque behavior.

-1 ( +0 / -1 )

Hopefully people have learned their lesson and don`t go out and buy $800 000 houses with a Hummer to go with it again.

And don't forget that we don't have Barney Frank and Chris Dodd to allow the Banks to give out low interest loans, Which was one of the major causes of the collapse it should be ok. But I heard Fannie Mae is back in business again.

0 ( +1 / -1 )

lostrune2, America is still far behind the rest of the developed world in education and infrastructure. Oh course, you people just want to stick your head in the sand and pretend everything is fine. You people froth at the mouth every time someone mentions something good about Japan.

-1 ( +1 / -2 )

It's all cyclical. Remember when the US was down, and people said they'd never get back up? There will always be bad times as well as good times.

1 ( +2 / -1 )

Lol. Sure, Japan is in recession and America is economically invincible. In 11 years when Medicare runs dry and millions of elderly and disabled can't afford their medications, what then?

-2 ( +1 / -3 )

While the US economy is doing well enough I am not sure that the benefits are going to be sufficient to pull the EU and Japan out of the doldrums while China is slowing at the same time.

0 ( +0 / -0 )

The US has always led the way. No idea where this idea that they don't has come from.

-2 ( +4 / -6 )

The USA has one gigantic advantage over everyone else: a strong entrepreneurial spirit that is lacking in other parts of the developed world. It's not a coincidence that the Internet revolution started in the USA, and the best-known standards for cellphones--iOS and Android--were developed by American companies. And everyone is admiring Elon Musk and his leadership of SpaceX and Tesla, two American companies that are on the verge of changing the world in terms of space exploration and automibles.

Because of the cultural norms in Japan, it's kind of hard to go from startup to super-successful company. Even Honda--now one of the world's most successful automobile companies--literally had to fight Japanese government bureaucracy just to start building automobiles in the middle 1960's.

2 ( +4 / -2 )

As in politics, there is no permanency in economics as well. China is rightly toning down its growth rate after a long spell of exceptional economic growth. India has launched a series of measures to move away from its economic sluggishness lasting a long time now. Japan is still in a state of economic chaos which has already lasted several years and there is no sign of an early recovery to sustainable growth. With these three major economic powers of the present century registering more or less stagnant economic growth, it is natural for the ball to land in the USA court! When the US economy shows signs of economic growth in the sky direction, there is likely to be a surge in overall economic activities which could result in an increase in overall consumption and this in turn could produce a need for more imports and that increase in US consumer demand could provide more opportunities for increasing economic activities elsewhere, notably in the three Asian countries featured here – China, India and Japan. Thus, the economic growth momentum will continue in this global era of inter-dependence!

0 ( +1 / -1 )

Right. Because all intelligent people derive their economic wisdom from JT. And the fact that, in recent history, each economic boom has come under a Democratic president while each bust has come under a Republican president is pure coincidence.

Really? What economic boom did we see under Carter? What bust did we see under Reagan? How about the bust in Clinton's term when the .com bubble burst? The economic effects of government policy changes are often not fully felt until years after they are implemented. Obama claims to have "inherited" a recession, Bush claimed the same thing. But parties make no difference, only people follow a political party, politicians follow the money.

But again, look at energy prices. Carter was hit by the Arab oil embargo, which resulted in recession. In the Reagan years, prices fell by about 40%. Prices stayed stable through the Clinton years, but rose steadily during the Bush years, and then shot through the roof in 2008. If you look at economic performance in America, you will see that the economy always performs well when oil is cheap, and always contracts when oil is expensive.

Bit of a coincidence that, just when lower oil prices would aid the US in its three biggest foreign policy problems - the ISL, Iran, and Russia - America's Mideastern allies agree to turn on the pipes and keep them running. And those who claim energy production is the source of this rebound: why is the rebound strengthening as prices fall?

The mideast has it's own agenda, and it is no friend of Obama. Obama failed to take advantage of the so-called "Arab Spring". What could have been a real chance for social progress and middle-eastern stability was missed, and taken advantage of by islamic fundamentalists, middle-eastern leaders will never forgive him for this. But the leaders of the middle east have less love for Putin than they do for Obama, and they know that they can control Putin in some way by controlling oil prices. Next, the cost to extract oil in America is higher than it is in the middle east. If oil prices become low enough, production in America will decrease, and prices will eventually climb again. The rebound is not being fueled, so to speak, by energy revenues, but because money which was formerly spent on fuel (much of which is imported) can now be spent on other goods. So rather than further enriching middle-eastern oil producers, much of the the money saved stays in America, and helps support American businesses, and the resulting jobs. Also, since America is the world's largest consumer of all goods, many of which are produced in other countries, when America's economy is doing well, it powers the economies of Europe and Asia as well.

Of course, America could have ramped up energy production years ago. In the past few years we have seen American oil production increase significantly, by about 40%. But all of this increase, 100% of it, has been done on state or private lands. Production on federal lands has deceased by 7%, and currently, 83% of federal lands have been made off limits to oil production. For those who believe in CO2 driven climate change, this is good, but for those who want more jobs, higher salaries, and more opportunities, it is bad.

2 ( +4 / -2 )

This is one reason why US interest rates are so low.

Low interest rate will not make good return for bank loans. According GFC started from Lehman brothers collapse, risky and unprofitable banks will fail like domino effects. Keeping hyper low interest rate for a long term is making US banks unhealthy. It is not according the wisdom from high school economic lessons. US regulators will need the stress test for banks for surviving the financial shocks in the future.

The next step is to restructure the economy to ensure that average workers can for once share in the prosperity.

It is easier to print the slogan instead of becoming the reality. Not only blue collars, highly skilled white collars in US are struggling to get back to good old days. For multi nationals Inc, US is less attractive comparing with India which could build the space ship to Mars with less than the normal budget of Hollywood movie.

For sharing the prosperity, average workers have to be more productive and competitive comparing with other nations.

0 ( +1 / -1 )

Hmm. Some need a bit of schooling in economics - and geopolitics. For example:

However it will be very unlikely Japan, China and Saudi will get back 100% of their money invested on US treasury bonds.

The US has never once defaulted on its debt obligations and likely never will. Even during the GOP-engineered government shutdown, there was discussion that debt obligations would take priority. This is one reason why US interest rates are so low.

(Obama) has almost no control over the current price of oil

Bit of a coincidence that, just when lower oil prices would aid the US in its three biggest foreign policy problems - the ISL, Iran, and Russia - America's Mideastern allies agree to turn on the pipes and keep them running. And those who claim energy production is the source of this rebound: why is the rebound strengthening as prices fall?

Many other points remain, but this rebound is real. The next step is to restructure the economy to ensure that average workers can for once share in the prosperity.

6 ( +7 / -1 )

The United States is back

Thanks to shale gas revolution. US is less reliant on foreign oil. It is good for environment. It is good for creditors of US for having good faith on US innovation. However it will be very unlikely Japan, China and Saudi will get back 100% of their money invested on US treasury bonds. They will lose some money anyway.

and ready to drive global growth in 2015.

US will get some growth in 2015. However this growth is unlike good old days of engine of world growth. It is the off shore mining boom unlike IT boom driven by service sector. Currently 30 % of US adult population are surviving with food vouchers. They need to get back stable long term jobs before reviving the consumers driven growth. Detroit is still the ghost town. 99% of blue collar jobs will never go back to US. Robots will be employed more.

2015 Growth without jobs creation likes eating hot dog without sauce.

Exports account for just 14% of U.S. output

US domestic market is too small for making the huge profits for energy sector. If future exports become 48% of output, US will become the Saudi of energy exporting nation. Both Russia and Saudi are facing recession due to oil price slump. The more US can cut the price, the more US can steal the market from them. In the real world, cut throat competition is the answer for expanding export market.

7 ( +7 / -0 )

You notice the article doesn't mention Obama's policies as being relative to the recent growth either.

Right. Because all intelligent people derive their economic wisdom from JT. And the fact that, in recent history, each economic boom has come under a Democratic president while each bust has come under a Republican president is pure coincidence.

The economy is too large of a ship for a single congress to excerpt much control. A steady hand at the helm over a long period is required. Let's hope Americans choose a slight leftward correction in 2016.

3 ( +4 / -1 )

That quote is from a vegetable shop owner who is waiting for the day when young people rush in to buy his produce. Sorry, but that kind of shop being the domain of fogies is a given.

1 ( +1 / -0 )

“The older people have money, but they don’t want to spend it,” Ogawa said. “The younger people want to spend, but they don’t have any money.”

I have a solution! Get ready... the older people give their money to the younger people! Problem solved! Or not...

2 ( +3 / -1 )

Lots of Japan money is flooding into USA. That may be helping too.

-3 ( +3 / -5 )

"Sorry, but I can't give Obama any credit here."

Call me sarcastic, but I never, ever would have expected YOU to feel this way.

The USA is currently in the midst of a second Gilded Age, but it will probably end as the first Gilded Age did by the 1890s. How that will impact economic growth I do not know, but economic growth isn't the be-all and end-all of life. Hopefully the society there will look fairer and less meaner overall and come back to looking more like Sweden and less like Haiti.

6 ( +7 / -1 )

All I want to see is the value of the USD go up. It's never about how much money you make, but how much value it has worldwide. If bread only cost $1.25 instead of $4.95 that would be a great sign.

The rich don't seem to get it as well as they could because they keep gathering more money expecting the value of the dollar to go up when instead inflation keeps the value down.

0 ( +0 / -0 )

All based on unrestrained money printing. jobs in the US haven't moved, wages neither. just plutocrats who are asset rich have got richer. Maybe it will last as a "recovery" but i am not si sure. Having said that i have been pessimistic all 2014 and have been badly burned for my pains.

3 ( +4 / -1 )

Hello Reporter, Could you answered Why Oil price is going down ?

1 ( +1 / -0 )

It has taken six years, but the Obama Administration has finally dug the U.S. out the disaster created by Bush et al. Hopefully people have learned their lesson and don`t go out and buy $800 000 houses with a Hummer to go with it again.

Sorry, but Obama did no such thing. He has almost no control over the current price of oil, which is the main driver of recent growth. In fact, he has restricted oil production on federal lands, which is where much of America's oil has come from. America's economy has always been largely oil-driven, mainly the consumption of oil. Obama's climate-change policies have been to reduce energy consumption in order to reduce CO2 emmissions. He must be foaming at the mouth knowing that America will probably increase it's CO2 emmissions by double-digits in 2015, his climate change goals are certainly now impossible if the price of oil remains low.

We can't forget that oil skyrocketed back in 2008, and it is very likely that oil prices had far more to do with the "great recession" than the mortgage crisis than previously thought. Had Obama allowed increases in oil production, the building of the Keystone pipeline (which he vehemently opposes), oil prices would have fallen earlier, and a real economic recovery would have started much earlier. Cheap energy has always been one of the foundations of a strong American economy, the economy has alway faltered or stalled when oil proces rise, it has always grown strongly when oil prices fall.

Sorry, but I can't give Obama any credit here. You notice the article doesn't mention Obama's policies as being relative to the recent growth either.

-11 ( +2 / -13 )

In what year for at least the last 100 or so, has the US economy NOT been the world economic engine? The title of the article implies at some point, some other country was the engine.

It is almost amazing how the american people are always able to power the economy back, despite and inspite of the democrats doing everything possible to kill the economy.

The democrats crashed the economy thanks to their 2006 to 2008 policies culminating in Obama digging a deep hole and tossing us all in and it took 6 years to recover from the mess caused by the democrats, just to get back up to where the US was when they took over.

Now with the democrats out of control and heading out of power in 2 years, the US economy is back on a growth track, mainly because the gridlock in washington prevents the politicians from doing any more damage.

The lesson for all other countries is everything about recessions is caused by government interference and incompetence. In Japan, the biggest mistake Abe made was that sales tax hike, politicians are the same everywhere, they just cant let their country just work, they always have to do something to increase their skimming off the top and it always causes problems.

-9 ( +3 / -12 )

DOUBTING JAPAN

“The older people have money, but they don’t want to spend it,” Ogawa said. “The younger people want to spend, but they don’t have any money.”

About sums up Japan's prospects. Meanwhile:

The United States is back, and ready to drive global growth in 2015.

Would all you folks here on JT who are so anti-TPP wake up and smell the coffee? Japanese industry needs completely free access to the world's largest economy, and one that is growing. And if the price of that is finally re-structuring Japan's ailing agriculture industry, it is worth it.

2 ( +6 / -5 )

Why? U.S. has natural resources and the drop of oil price is a "x factor" in consuming oriented society. If the trend continues, U.S. economy will become stronger after 2016. The Constitution provides the frame work for enduring value in human endeavor that works well in an open society. Just be careful of the Trojan horse disguises under the banner of political correctness.

0 ( +4 / -4 )

Japan could have this growth, too, if it let in some substantial immigration.

1 ( +7 / -6 )

I also would congratulate the US for lifting up their economy and opening up more opportunities for their youth. A word of caution, don't go searching for enemies around the world just for the sake of placating the hungry arms industry.

3 ( +5 / -2 )

It has taken six years, but the Obama Administration has finally dug the U.S. out the disaster created by Bush et al. Hopefully people have learned their lesson and don`t go out and buy $800 000 houses with a Hummer to go with it again.

11 ( +14 / -4 )

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