We added three million jobs, unemployment fell to 5.6 percent, and GDP grew by 2.4 percent for the year. Unfortunately, despite the contentions of the San Francisco Federal Reserve’s report, we appear to be losing momentum. Is America’s Growth Slowing?
So, what happened?
The Economist reported a variety of factors have contributed to the slowdown. The U.S. dollar has gained 20 percent in value against the euro during the past year, which made exports more expensive. In fact, exports were down about 3 percent, year-over-year, in March. Also, oil prices fell, which knocked 0.8 percentage points off economic growth as investment in mining structures shrank. Finally, American consumers didn’t spend as much as experts anticipated they would, despite lower oil prices. Lower-than-expected spending may reflect weak wage growth.
While growth in the United States shows signs of slowing, the Eurozone’s growth is accelerating. The region emerged from a double-dip recession in the spring of 2013, according to The Economist. Many large country’s economies, including those of Spain and France, delivered relatively strong GDP growth during the first quarter of 2015. As a whole, the Eurozone grew by 0.4 percent during the quarter, outperforming the United States.
Why is the Eurozone doing so well?
The European Central Bank took a page from the Federal Reserve’s playbook and began a round of quantitative easing (QE). QE has contributed to the euro losing value against the U.S. dollar, which has helped Eurozone exports. Also, consumers in the Eurozone have been spending the windfall created by lower oil prices.
Will the United States and the Eurozone be able to sustain positive economic growth? Only time will tell.
Weekly Focus – Think About It
“There is nothing noble in being superior to your fellow men. True nobility lies in being superior to your former self.
–Ernest Hemingway, American author
http://www.economist.com/blogs/economist-explains/2015/05/economist-explains-13 (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/06-01-15_TheEconomist-The_Slowdown_in_the_American_Economy-Footnote_4.pdf)
http://www.economist.com/blogs/economist-explains/2015/05/economist-explains-16 (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/06-01-15_TheEconomist-Why_the_Euro_Zone_is_Recovering-Footnote_7.pdf)