VCheng
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It looks like the US economy is finally slowly and steadily on the path to recovery:
(full story at: The American economy: Unmired at last | The Economist)
Perhaps the reports of impending demise of the US economy are greatly exaggerated?
And China ran a $31.5 billion trade deficit in February:
(full story at: China)
Beneath all this, Americas economy is slowly rebalancing itself. After living beyond its means for more than two decades, America needs to export and invest more. Changes in prices are one of the mechanisms that make that happen. Just as lower property values drive capital and labour away from housing, a lower dollar draws them to exports and industries that compete with imports.
Years of high oil prices are driving up fuel efficiency. They have also stimulated domestic supply, in particular from unconventional sources like North Dakotas Bakken formation. As a result America is importing, net, 9m barrels of oil a day, compared with 10m in 2008.
Domestic oil and gas production have played a part in the recovery of manufacturing by spurring related exports. Although a net importer of crude oil, America was last year a net exporter of energy products such as petrol. Cheap shale gas has revived the petrochemical industry, which uses it to make ethylenewhich in turn is used in everything from grocery bags to bottles and tyres. The American Chemistry Council, an industry group, reckons shale gas could generate 17,000 jobs directly in the petrochemical industry, and many more indirectly.
Manufacturing employment, which declined almost continuously from 1998 through 2009, has since risen by nearly 4%, and the average length of time factories work is as high as at any time since 1945. Since the end of the recession exports have risen by 39%, much faster than overall GDP. Neither is as impressive as it sounds: manufacturing employment remains a smaller share of the private workforce than in 2007, and imports have recently grown even faster than exports as global growth has faltered and the dollar has climbed. Trade, which was a contributor to economic growth in the first years of recovery, has lately been a drag.
But economic recovery doesnt have to wait for all of Americas imbalances to be corrected. It only needs the process to advance far enough for the normal cyclical forces of employment, income and spending to take hold. And though their grip may be tenuous, and a shock might yet dislodge it, it now seems that, at last, they have.
(full story at: The American economy: Unmired at last | The Economist)
Perhaps the reports of impending demise of the US economy are greatly exaggerated?
And China ran a $31.5 billion trade deficit in February:
The deficit has fuelled one fear and one hope. The fear is that Chinas economy will slow sharply, hobbled by declining exports to crisis-racked Europe and a rising bill for commodities like oil. The hope is that China is rebalancing, moving away from an economic model reliant on foreign demand. Neither the hope nor the fear is wholly justified by this months figures.
It is true that Chinas weak exports are contributing to a slowdown in the broader economy. Chinas industrial production grew by 11.4% in January and February, compared with the same two months in 2010, much slower than its normal pace of about 15%. But the prospects for global growth are brightening, suggesting that Chinas exports have bottomed out. And the slowdown in Chinas economy has been matched by a helpful fall in inflation. That gives Chinas government some scope to stimulate demand.
What about rebalancing? Februarys trade deficit may be an anomaly but it highlights a broader trend: the swift decline in Chinas external imbalance. Chinas current-account surplus, a broad measure of the countrys external payments and receipts for goods and services, fell to 2.8% of GDP last year from a peak of over 10% of GDP before the financial crisis.
(full story at: China)
