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US Economy Holding Strong Despite Global Instability, But For How Long?

January 12
9:02 AM 2016

Despite a worrying global economy, the US economy is maintaining growth domestically. But the question is how well the US economy can hold its positive movement in the midst of so much worldwide instability.

The US Labor Department reported a continuing low unemployment rate of 5 percent and the jobs gained in the last three months of the year were the best increase since last January. Economists point to steady consumer spending, a small increase in home construction, and more government spending as some of the reasons how the US could weather the global storm.

A better US economy will also encourage more imports from other countries, especially with the strength of the dollar. But importing goods is only as useful if consumers buy those goods and currently US consumers are focused on spending on services like restaurants and health care.

Mark Vitner, an economist at Wells Fargo told US News that the report, "immediately puts to rest a lot of the worries that the U.S. economy will come undone due to the intensifying global headwinds coming out of China and the Middle East... The US is uniquely positioned among the major industrial economies to withstand a global slowdown."

The Washington Post gives a slight word of warning about the assumptions of the strength of the US economy in relation to China's slowing economy. "A slowdown of half percentage point, or even a percentage point slowdown, is not going to have a very big impact on the U.S. economy. If you're South Africa or Peru, Chile, Colombia, Malaysia, or Thailand, then it's a different matter."

As The New York Times pointed out, the economic slowdown has not been isolated to China either. Brazil and Nigeria have been struggling for the past two years and Europe and Japan are growing only the smallest amount.

The International Monetary Fund has forecasted a 2.8 percent growth for the US in 2016, which is great for the country now, but could hurt the country in the long run. The growth of the US has already caused problems in the industrial sector due to the strength of the dollar.

Oil producers and their suppliers have to now deal with the increase in the price of exported goods. And the longer the US stays strong while the rest of the world is unstable, the more it will hurt American exporters.

The question if America can stand strong comes down to how well the world can make up the difference between the growth of the US economy and the current slowdown of countries like Japan and China. These are tough goals, with plenty of risks that could possibly affect countries worldwide, but the alternative - the US faltering - would assuredly put the world's economy into a major recession, something no one wants. 

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