America’s Role as Consumer of Last Resort Goes Missing

Household final consumption represents about 70 percent of US gross domestic product, yet “Cheaper fuel and raw materials are boosting manufacturing, making the U.S. more of a competitor to emerging-markets nations and less a reliable consumer of their goods,” reports Simon Kennedy for Bloomberg. The US recorded its lowest current-account deficit since 1999, assisted by new supplies of domestic energy and increased investment in US property. The US contributes less to global growth, accounting for 22 percent of worldwide GDP in 2013, down from 31 percent in 2000, according to IMF data, while China accounts for 12 percent, Kennedy reports. Slower growth may be more sustainable. Also, the inevitable end of US stimulus funding, a response to the global economic crisis in 2008, will exacerbate challenges for the emerging economies. One fund manager points out that investors are already “separating good countries from bad.” Central bankers for emerging economies plead that the US Federal Reserve ease stimulus spending, gradually and with great caution. – YaleGlobal