by Michael Roberts
The US economy is the largest and most important capitalist
economy. It is usually considered as having performed the best of the
top seven largest economies since the end of the Great Recession in
2009. But is that really true?
If we take the average real GDP growth since 2009, we find that US
growth has been lower at just under 2.2% than Canada, admittedly a much
Similarly, if we look at the average real GDP growth per person (per
capita), US economy has average growth of just 1.4% a year, much lower
than Germany at over 1.9% a year – although all the G7 economies are
performing poorly. In particular, note the terrible performance of
Italy, with an average contraction in both GDP and GDP per capita.
The story of the US economic giant since the Great Recession is one
not just of stagnation but of disappearing economic growth in the
weakest economic recovery after a slump since the 1930s.
In its latest economic outlook,
the IMF is forecasting just 1.6% annual real GDP growth for the
‘advanced economies’ down from 2.1% in 2015 and down from its July
forecast of 1.8%. And the main reason for this downgrade forecast is
that the IMF now expects the US economy to expand at only 1.6% this year
from a previous forecast of 2.2%. This slowdown is to be mirrored in
the UK (forecast 1.8% from 2.2% in 2015) and in the Eurozone (1.7% from
2% in 2015). As for Japan, it is expected to expand in real terms by
Maurice Obstfeld, the IMF’s chief economist, said the global economy held still significant risks fed by a “cocktail of interacting legacies”
from the 2008 global financial crisis. These included high debt
overhangs, bad loans on banks’ books and moribund investment, which were
continuing to depress the global economy’s potential output. Growth “has
been too low for too long, and in many countries its benefits have
reached too few — with political repercussions that are likely to
depress global growth further,” Mr Obstfeld said.
end of globalisation and its benefits to the largest and most powerful
capitalist economies is giving way to weak trade growth and the
collapse of future international trade agreements as political leaders
respond to pressure to drop trade pact like TPP or TTIP and in the case
of the UK, to leave the European Union and seek bilateral trade deals.
The hope was that US economy would pick up in the second half of 2016
– yet another bout of optimism that is losing force. The Atlanta Fed
Now GDP forecast is usually pretty accurate for US GDP growth. At the
beginning of the quarter starting in July and finishing in September, it
predicted a 3.7% annual growth rate. Now it is forecasting just 2.2%.
Expect it to drop even lower before we get to the official figures.
Similarly the Fed New York forecast is for 2.2% in the third quarter and
just 1.2% in the fourth quarter.
For the long term, the US Federal Reserve bank economists are now
forecasting just 1.8% a year expansion for the US economy compared to
2.6% at the end of the Great Recession. And all this assumes no new
economic recession. The current ‘recovery’ is already one of the
longest since 1945, having been supported by massive monetary injections
by central banks globally. But monetary pumping has not worked.
The likelihood of a new economic slump is high for 2017, as I have argued in previous posts.
But even without that, US capitalism’s economic performance is poor and
only saved by the pitiful results achieved by other top capitalist
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