This will be the most consequential year for the global economy since the financial crisis for two reasons: Economic growth is likely to run below the already weak trend of recent years. And leading finance ministers and central bankers will need to improve upon the blame-thy-neighbor policies that have recently gained traction.
The U.S. business sector is not poised for a material upturn in growth. Nonresidential business capital expenditures are weak. Industrial production is down. Total corporate debt increased 25% over the last four years to $8.1 trillion, according to recent data compiled by the BEA. Yet the Federal Reserve insists that the demand side of the economy is in good shape. I hope the Fed isn’t asking more from consumers than they are prepared to deliver: About 70% of Americans believe the economy is on the wrong track and anemic growth and flat incomes are an obvious, if less politically salient, explanation.
Read the full article "The Blame-Thy-Neighbor Economic Excuse."