A floundering global economy is turning its eyes to the US (and the US consumer) to save the day. But is America equipped to carry the load?
While Europe struggles, Japan trudges along and emerging economies underperform, it seems the US is "the only engine of growth," World Bank COO Sri Mulyani Indrawati says.
Last year the US accounted for roughly 23% of global growth, according to World Bank estimates—its highest contribution since 2003. And it's expected to contribute a strong 21% this year, the Wall Street Journal reports.
Additionally, the International Monetary Fund predicts the US will grow 2.6% this year and next (although private sector economists forecast expansion to be a smidge slower).
But here's the downside: many worry the US economy won't be able to shoulder the load. Treasury Secretary Jacob Lew says the US is just not a powerful enough engine to drive the whole global economy.
"The world can’t depend on the United States to be the consumer of first and last resort," he tells the WSJ.
Still the rest of the world can't help but look at our spending habits with a degree of hope. Last year US consumer spending grew 3.1%, the fastest annual increase since 2005. American exports have taken a hit thanks to a strong dollar, making goods more expensive overseas.
But a recovering job market and lower energy prices have boosted spending power, which accounts for more than two-thirds of the GDP. Even so, the US economy has its own concerns, and if the global economy continues to lag, it could spill over to us, which could be bad news for everyone. [WSJ]
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