Comment du Jour

Global Growth Sputters; U.S. Engine Losing Steam



Global economic growth continues to sputter, the American economy falters, and chances for recovery are not on the immediate horizon. But while the USA and much of Europe continues to feel the undertow of recession, large economies in Brazil, China, India nonetheless continue to grow.

“After a year of fragile and uneven recovery, global economic growth started to decelerate on a broad front in mid-2010,” warns a United Nations report, adding “The slowdown is expected to continue into 2011 and 2012 as weakness in major developed economies continue to provide a drag on the global recovery.”

The bellwether survey World Economic Situation and Prospects Report, states, “The United States of America has been on the mend from its longest and deepest recession since the Second World War, but had nonetheless been experiencing the weakest recovery pace in history….a full recovery of employment will take at least another four years.”

Economic stagnation in the USA continues. A Wall Street Journal headline reaffirmed the case, “Job Market Loses Momentum.” Job growth in the USA has been anemic despite the massive trillion dollar infusions of stimulus aid. The U.S. has 14 million officially unemployed while the May jobs market added a mere 54,000 jobs. The jobless rate ticked up again hitting 9.1 percent. Moreover lackluster GDP growth of merely 1.8 percent in the first quarter hardly changes the game.

European economies face a mixed report card; Germany saw a strong rebound with 3.4 percent economic expansion in 2010 while France recorded 1.6 percent, and the United Kingdom 1.8 percent. Yet this year the numbers even in the higher growth economies are expected to slip while debt ridden economies in Greece, Ireland and Portugal are still sadly recording negative growth numbers.

Traditionally stubborn unemployment rates in Europe range from 20 percent in Spain, to 10 percent in France and 6.7 percent in Germany. Unemployment in Europe tends to be higher given the benefits which indirectly encourage it, and rigid labor laws which discourage new hiring.

But for the USA to have a longtime unemployment rate along the lines of France is rare and indeed unacceptable.