What can overthrow the US economy
Fateful year for the US economy
The location of the world's most important economy is of global importance. After a good year overall, the USA could finally say goodbye to the economic crisis mode in 2015. But there are some stumbling blocks on the way there.
The Fed's tightrope act
In 2015 the Federal Reserve (Fed) is likely to raise interest rates for the first time in around nine years. The economy is growing vigorously again and the labor market is recovering better than it has been since the 1990s. Apart from the low inflation rate, the central bank can hardly find any reasons to hold on to the historically low interest rate of just over zero percent.
The foreseeable end of the cheap money era harbors dangers. Rising borrowing costs could slow down the real estate market or prevent companies from investing. The central bank boss Janet Yellen wants to avoid an economic shock and hasty reactions on the stock exchanges at all costs. That is why she stressed at her press conference in December to "remain patient" and proceed cautiously. According to her, nothing will happen on the interest rate front at least until the end of April.
The debt ceiling drama
In mid-March, the time has come again: The US debt could exceed the legal limit. The deficit in the treasury is already almost a trillion dollars (820 billion euros) higher than it should actually be - the limit is 17.2 trillion. Just because the 2013 limit was simply suspended until March 15, 2015 after a serious dispute between President Barack Obama's Democrats and the Republicans, the government is currently allowed to pump money.
It is likely that Republicans will tie the increase or further suspension of the cap back to tough concessions from the president. The question is whether they will even allow the deadline to pass and plunge the US into bankruptcy, at least for a short time. But even if an agreement is only reached at the last minute, as is so often the case, experience has shown that the nervousness on the financial markets could damage the US economy.
The moment of truth for the economy
The recovery from the worst economic crisis since World War II was very slow in the USA. It took more than six years to rebuild the 8.7 million jobs lost. Gross domestic product growth remained below the post-war average of 3.2 percent. Economists doubted whether the world's largest economy will ever regain its former strength. Now the situation seems to be improving rapidly. In the third quarter, the economy grew by 5 percent over the year. In four of the last five quarters the increase was over 3 percent. Analysts expect a high pace in 2015 as well.
But the US economy is fragile. It depends to 70 percent on the consumption of the citizens. Their wages are rising slowly, long-term unemployment is high, and the gap between rich and poor is growing. The consumer mood can change quickly.
The curse of the strong dollar
Having a strong currency sounds good at first. In fact, Americans are increasingly concerned about the rising dollar. In the last six months, the reserve currency has become a good 12 percent more expensive - and with it the goods that other countries import from the USA. Rising prices can lead to falling demand for US products. At the same time, products from abroad are becoming cheaper for Americans.
Consequence: The last shrinking US foreign trade deficit could grow significantly again in 2015. A rate hike by the Fed could add to the dollar upswing.
The braking force of the world economy
The USA is no longer as isolated in the global economy as it used to be. The weaker economy in China, the sluggish economy in Japan, weak growth in Europe or the collapse of the ruble in Russia - the possible negative spillover effects on America should not be underestimated, according to experts. "The biggest risk is one we didn't think about," said University of Michigan Professor Justin Wolfers on NBC. But overall, the US economy appears robust enough to withstand moderate global problems.
- Is the Khan Academy a MOOC
- What challenges are there only for tall people
- Malaysians grow up in Singapore
- Is data science more difficult than software engineering
- You can use edible oil as a lubricant
- Why do we need cleaning services
- What is RGB
- How can we identify a profitable niche
- Obesity Saunas Help You Lose Weight
- How difficult is the IIT JEE
- Which is better 9mm or 10mm rounds
- How can habits change your life
- What are your sources of extra income
- What are the examples of strong people
- Why is society based on money
- What is bad handwriting a sign of
- Where do math symbols come from
- Is it bad to eat cherry seeds
- Why should I enter into a relationship
- How are plastic models made
- Is international law really a law?
- Will humans ever live on Mars?
- Why did Indonesia and Malaysia banned yoga
- Vegetarians have problems in Germany
- How does Amazon make such big profits
- Are data scientist jobs competitive
- What is adult education theory
- What's the best alternative to Pardot
- Why are the Ivy League schools prestigious
- Is Aung Suu Kyi a dictator
- Who discovered DNA
- What is useful money or knowledge
- Who wants to own a yacht
- Day old bread is safe to eat