U.S. economy is growing, but slowly
The economic future for the United States is somewhat positive, but not overwhelmingly optimistic, said Zanny Minton-Beddoes, economics editor for “The Economist” magazine, who spoke Tuesday in the auditorium of the Upper St. Clair High School during the most recent Town Hall South lecture.
Speaking in a rapid, clipped British accent, Minton-Beddoes said the U.S. economy is growing, but not very fast. After many financial recessions, the economy, regardless of the country, produces a “V” shape where the graphs plunge down, hit bottom, then rise rapidly to about where the economy was before the recession.
No so with the most recent economic downturn in the United States. She referred to the recovery as “lackluster.” There has been no rapid bounce back to the top of the “V.”
Wages are basically stagnant, unemployment is high and many of those who lost their jobs during the recession are no longer working and are dependent on working family members.
Financial woes are not restricted to the United States, Minton-Beddoes said. What’s happening in the United States is also happening in other parts of the world like Europe, especially in Greece, where unemployment among the young is 60 percent. In Spain, unemployment for the youth is at 50 percent.
“They could become a lost generation,” Minton-Beddoes said. “It’s a shocking waste of talent.”
The same is true in Egypt, which has the youngest population in the world, yet most are unable to find work, she said. Japan is trying to pull itself out of a two-decade-long recession and while China, which has the second-largest economy, continues to grow, there are signs of a slowing financial base.
Referring to China, Minton-Beddoes said, “It is going to have a hard landing.”
When she visited China for the first time in 1992, she said there were only bicycles for transportation. Now, cars are everywhere and skyscrapers are being built.
China, she said, relies on exports and investments for its continued growth, but the population is aging. China is improving its infrastructure and using other means to encourage the population to spend more money.
While the Chinese are thrifty, the U.S. population spends more money.
“There is a huge explosion of credit in China,” Minton-Beddoes said. “The Chinese save more than half of their income in a year.”
If China crashes economically, the entire world will be in trouble, she said.
The world economy, at one time, was driven by the United States. Currently, the emerging nations are in charge, like India and Brazil. And while the Brazilians thought their economy was stronger than it actually was, Minton-Beddoes said, while weaker than thought, Brazil “still has a huge potential.”
European countries that use the euro as currency need to become better organized. The “bubble has burst” in Greece, Italy, Portugal and Spain, she said.
“Surprisingly, the U.S. is the least dirty shirt in the laundry basket,” Minton-Beddoes said.
There is no way to accurately predict future trends, but there are areas to watch.
Natural gas reserves will help to boost the U.S. economic standing. Already, natural gas prices are four times lower than in Europe. There “is a lot more to come,” she said of the natural gas reserves, and that will help to reshape the U.S.’s competitiveness in the energy fields across the globe.
The U.S. should be more cautious about trade agreements that could shift to a more regionalized approach, and technology will change how the population receives information.
Aging populations will influence decisions.
“Japan sells more adult diapers than baby diapers,” she said.
And while the world appears to be on shaky financial ground, Minton-Beddoes said, even with its difficulties in the short term, the U.S. “looks to be the best.”