The Global Recovery Now Has Two Big Engines

More

China's trade surplus was $6.45 billion in January. Some economists believe that China's import rise were partly due to higher prices that the People's Republic must pay for commodities. Another part of the increase is due to "true" demand. China's consumer economy may finally be taking hold. The Chinese middle class, which has been a savings class, may finally be starting to purchase significant amounts of imported goods from the United States and other countries with their rising wages.

China's economy is now the second largest in the world based on GDP. Consumer activity could become a larger part of that if the trade surplus decline continues. That along with strong exports should keep China's economic expansion at 8% to 10%, presuming inflation and some measure of trade protectionism from the West do not cripple its growth.

The Wall Street Journal panel of economists recently said that 2011 U.S. GDP growth will happen more rapidly than expected. "The 51 economists polled--not all of whom answer every question in the survey--expect gross domestic product will be 3.5% higher in the fourth quarter of 2011 than a year earlier, up from the 3.3% increase they projected in last month's survey. That would be the largest increase since 2003," the Journal reported. Based on rising consumer and business confidence, the growth may be even faster. The 2011 tax cuts and an even modest increase in employment could tip the U.S. economy into really rapid growth, particularly for a nation with GDP of $15 trillion.

It was only six months ago that U.S. government and private sector data made a 2011 recovery uncertain. Economists may still refuse to give enough consideration to unemployment and the damaged housing market, which would make their optimism misplaced. Presumably, the WSJ economist panel took those things into consideration but believes that the American consumer is tired of austerity and business believes that the earnings improvement of the last two quarters can be maintained.

The U.S. economy was supposed to be what kept global GDP growth modest this year and next. It turns out that may not be the case. American demand for goods and services should help the Chinese economy. Germany's growth rate has improved rapidly as its exports have surged. Its effects on worldwide growth are small but proof that GDP recovery among large nations has quickened, when Japan is backed out.

The recession shattered every economy to some extent. The pieces may be coming back together again faster than expected. Global GDP now runs on two large engines, as the U.S. recovery takes an unexpectedly positive turn.

Jump to comments
Presented by

Douglas A. McIntyre

Douglas McIntyre is editor of 24/7 Wall St.

Get Today's Top Stories in Your Inbox (preview)

Social Security: The Greatest Government Policy of All Time?

It's the most effective anti-poverty program in U.S. history. So why do some people hate it?


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

Adventures in Legal Weed

Colorado is now well into its first year as the first state to legalize recreational marijuana. How's it going? James Hamblin visits Aspen.

Video

What Makes a Story Great?

The storytellers behind House of CardsandThis American Life reflect on the creative process.

Video

Tracing Sriracha's Origin to Thailand

Ever wonder how the wildly popular hot sauce got its name? It all started in Si Racha.

Video

Where Confiscated Wildlife Ends Up

A government facility outside of Denver houses more than a million products of the illegal wildlife trade, from tigers and bears to bald eagles.

Video

Is Wine Healthy?

James Hamblin prepares to impress his date with knowledge about the health benefits of wine.

Video

The World's Largest Balloon Festival

Nine days, more than 700 balloons, and a whole lot of hot air

Writers

Up
Down

More in Business

Just In