BY Fraser Tennant
The US has reclaimed its position as the dominant force in the global economy, according to leading economists.
Following 15 years of stagnant growth, influential figures at JPMorgan Chase & Co, Deutsche Bank AG and BNP Paribas SA, suggest that 2015 will see the US economy expand by 3.2 percent – its strongest rate of growth in a decade.
The resurgence of the US as a leading economic force is largely being credited to an improving jobs market – the unemployment rate has fallen to 5.6 percent (the lowest since 2008) and 2014 saw an additional three million people in work – which in turn has led to an increase in personal consumption expenditure ($11.5 trillion in 2013).
“The US is again the engine of global growth,” said Allen Sinai, chief executive of Decision Economics in New York. “The economy is looking stellar and is in its best shape since the 1990s.”
While sectors including construction, healthcare, manufacturing and business services are all benefiting from US economic growth, wages, however, have stagnated with average hourly earnings falling 0.2 percent last month.
“We are still waiting to see the kind of strengthening of wage numbers we would expect to be consistent with what we are seeing elsewhere in terms of growth and the absolute jobs numbers,” said Dennis Lockhart, president of the Federal Reserve Bank of Atlanta. “It’s just a matter of time before wage growth picks up.”
The surge in US growth has also been attributed to stringent policy-making – in particular the budget decisions which have navigated the US through the economic storm with far greater success than that of their European counterparts.
“Progress has been far greater in the US,” said Glenn Hubbard, dean of the Columbia Business School in New York and a former chief White House economist. “Looking across much of the rest of the world, the US continues to dominate.”
At the same time as US growth goes from strength to strength, the economies of Brazil, Russia, India and China – the BRIC nations – are flagging with debt, recession, US and European sanctions and plummeting oil prices all playing a part.