Federal Reserve Chairman Ben Bernanke’s verdict on the U.S. economy is sobering. Boiled down, this was the message delivered at his news conference today:
Brace for roughly three more years of sluggish growth – or longer
Some of the unemployed will not find work in the foreseeable future
America’s economic power has downshifted
Global financial markets could upend recovery yet again
It is a bleak outlook. Bernanke has left little doubt that he sees the United States in the midst of very long and painful period of sub-par growth, dousing some of the optimism stirred by recent reports that showed unemployment falling, the housing market hitting bottom and businesses starting to spend again.
It used to be the low-end stuff like shoes, clothes and furniture that displaced American manufacturing, then cars and consumer electronics. A new report by Alan Tonelson, a researcher at the U.S. Business and Industry Council which represents 1,500 American companies, now shows that high-end U.S. industry is facing ever tougher foreign competition in its own backyard.
Tonelson has crunched the numbers since 1997 on high-value, advanced manufacturing – the crown jewel of American industry that is capital intensive and depends on technological superiority such as turbines, pharmaceuticals and electrical engineering. He finds that imported products had captured 38 percent of the $1.63 trillion U.S. market for advanced manufactured products by 2010, up from 24.5 percent when the government started collected the data in 1997. Only six U.S.-based advanced manufacturers have gained market share in the United States in the 13-year period. Sectors that are more than 50 percent dominated by foreign producers have risen from eight in 1997 to 32 by 2010, he said.
(Reuters) – Five years after the credit crisis began, Western economies are confronting the prospect of a lost decade of growth, and international diplomats are warning the damage could get even worse if Europe allows its sovereign debt crisis to fester much longer.
International Monetary Fund chief Christine Lagarde is heading to Berlin on Monday to urge action after the IMF called for member countries to provide the fund with $500 billion for new loans to help out troubled countries.
(Reuters) – Walk softly. Global growth looks to be smoothly downshifting as China slows, the U.S. economy firms, and troubled Europe, at least for now, avoids a messy crash.
Ratings downgrades on nine euro zone countries by Standard & Poor’s late Friday – including France, Italy and Spain – sent a shiver through financial markets. But the move was long telegraphed, likely limiting any spillover.
(Reuters) – Mitt Romney, the frontrunner for the 2012 Republican presidential nomination, is promising Americans deep spending cuts, smaller government, trade penalties on China, a new Federal Reserve chairman and sweeping deregulation.
The bold economic strategy Romney has sketched out in his White House bid seems designed to appeal to the radicalized conservative base of the Republican Party enamored of the gold-standard ideas promoted by libertarian congressman Ron Paul and budget slashers in the populist Tea Party movement.
(Reuters) – Counting container ships plying the high seas and air cargo takeoffs is one way to track the outlook for the global economy. Both measures point to weak growth in the months ahead but no severe storms.
Solid employment gains in the United States that pushed the jobless rate down to its lowest level in almost three years and a stabilizing of business activity in December even suggest global growth could firm at the start of 2012 — a welcome contrast to the gloomy predictions at the close of last year.
(Reuters) – It’s up to the consumer to drive the U.S. economy and lift world growth in 2012, and the outlook is far from encouraging.
Over the past three and half years, growth in U.S. consumer spending has averaged a paltry 0.2 percent adjusted for inflation, the weakest in the post-World War II period, Morgan Stanley says.
(Reuters) – Dysfunctional politics threatens to deliver a protracted period of slow global growth, possibly lasting well beyond 2012, which will only deepen the political and economic problems for the West.
The global financial crisis that began four years ago has morphed into a political crisis for the United States and Europe. Leaders incapable of wrestling their debt loads to manageable levels or reviving strong economic growth are stoking turmoil in markets and populist unrest among the citizenry.
WASHINGTON (Reuters) – The U.S. housing market, once the epicenter of the global financial collapse that spawned today’s European debt crisis, is on the verge of delivering some positive news.
For the first time since 2005, U.S. residential construction looks set to expand a little next year, and it could add one- or two-tenths of a percentage point to GDP growth in 2012 — a mere sliver, but one that would add to the picture of a slowly healing U.S. economy.
WASHINGTON (Reuters) – Fiscal austerity in Europe demanded by markets and exacted by Germany as the price for saving the euro currency is taking its toll on the world economy. A global slowdown is spreading.
Its severity rests largely upon whether financial markets remain confident that European Union leaders have delivered a euro-zone rescue plan with strong enough protections to support their bond markets and halt the spread of the sovereign debt crisis.