The US economy’s current strength appears fleeting. Its short-term resilience is already faltering and, in view of worrisome long-term ...
NEW HAVEN: US President Donald Trump’s administration has underestimated China’s resilience and strategic resolve. With the Chinese economy slowing, the US believes that China is hurting and desperate for an end to the trade war.
Meanwhile, the effects of US tariffs are only just starting to bite. While exports to the US fell by about 3 per cent year-on-year in December 2018 and January 2019, shipments to the rest of the world have continued to expand, owing largely to resilience in emerging markets, especially Asia. But with fiscal stimulus fading, GDP growth should follow suit – consistent with the Congressional Budget Office’s latest projection of just a 2.3 per cent rise in 2019.Risks of an even weaker outcome are mounting. The rebound in US equity prices in early 2019 has not offset the sharp decline in late 2018, which took a heavy toll on household wealth and consumer confidence, prompting an outsize decline in retail sales in December.
Moreover, fully 85 per cent of America’s gross saving goes toward replacement of obsolete and worn-out capital stock.
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