Global Recovery=American Spending
Posted by Stephen Cline on June 23rd, 2010The global economy is once again being depended on when the Europeans have cut back on spending due to the weakening of the euro; the Chinese exports will have to be depended upon the consumption of the American population. The old habit of American customers spending huge on products will hope fully sustain the global recovery process. This can assure that the American people are the last resort for the shaking global economy.
Even after the silence of the Euro debt crisis and the mediocre increase in American jobs, the spending pattern of the millions of people in America still determines the global economy. The problem is if the American people can continue their spending ways or if their spending will stop and they will go into conservation mode and reduce their huge debts. If the former happens and they start using their plastic cards and increase the already huge debts, leading to the creation of another financial bubble. But if the latter step is taken by the American people, then the consumer goods production will increase and new jobs will be created leading to a positive growth.
But it looks like the creation of a huge bubble has already started taking place with people buying more which can be known from the increase in the U.S. trade deficit. This increase in Trade deficit is also because of the increase in the American dollar value when compared to the euro and the high costs that American goods will be sold at in the European markets.