In recent months it has been said that the economy of the United States has the wind in its sails. The programs of quantitative easing, the federal funds rate close to zero, and the multimillion dollar rescue operations of the banks that are “too big to fail” have contributed decisively to diminish private debt (families and private enterprises), to invigorate productive investment and finally, to support the recovery of the labour market.

In April, the unemployment rate of the United States fell to 5.4%, the lowest level since the bankruptcy of Lehman Brothers (it should be remembered that between the end of 2008 and the beginning of 2009 the unemployment rate was close to 10%).

According to the Department of Labour, non-agricultural employment increased by 223,000, basically due to the service sector (telecommunications, commerce, tourism, etc.), with which they countered the loss of work places in mining, gas and petroleum.

 At the same time, the economically active population (EAP) increased somewhat, to 62.8 percentage points, while salaries increased by three cents per hour, an amount that represents an increase of 2.2% annually.

Thus there are some who maintain -as Paul Krugman- that the US economy is close to “full employment” with an unemployment rate of 5% (the average during the 1990s). At the present time, the 2008 Nobel Prize winner, in his New York Times column on April 3, wrote that is it necessary to increase wages in more enterprises, as McDonald’s and Walmart have done, in order to increase the purchasing power of the middle class.

The Federal Reserve (Fed) and the International Monetary Fund (IMF) for their part are optimistic. Both institutions say that we may expect annual growth rates between 3.5 and 4% for 2015 and 2016, with which the US economy will be well above Europe, Japan and most of the South American economies.

Everything indicates that the United States will be the growth mechanism on the global level. Hence, thanks to the strength of the recovery, an increase in the interest rate by the Fed appears imminent. By mid-year, in October, or perhaps a bit later, in December, financial analysts foresee that this year the cheap credits will see an end.

In their meetings, the members of the Committee of Operations of the Open Market (FOMC) insist on the need to inaugurate a process of gradual transmission that will allow the US economy to lessen the risks of financial instability (the unusual increase in the New York stock market), overcome the deflationary tendency (lowering of prices), and with this, consolidate economic growth over the long term.

Nevertheless, it is necessary to take into account that even if the recessive character of the US economy was officially overcome in mid-2009 (having avoided the fall in economic activity through various trimesters), this does not imply that Washington has avoided the threat of successive collapses.

In the first trimester of 2015, the gross domestic product registered a weak advance of 0.2% in annual terms, well below the 2.2% growth of the fourth trimester of 2014. Nevertheless, the Fed insisted, as it had in previous reverses, that this was a “temporary phenomenon”, in which the cold winter had resulted in a fall in consumption of families and in investments of enterprises of the energy sector.

 The leaders of the United States tend to abstract entirely from the complicated global panorama that faces them. The economic deceleration of China, India and other emerging economies, gains strength in an international context characterized by the fall in prices of prime materials (commodities), the massive emission of corporate bonds by private institutions with a high grade of leverage and, finally, a growing tendency to assume risks by institutional investors in financial speculation.

US enterprises tied to the export of merchandise are increasingly skeptical in the face of the “favourable effects” of the appreciation of the dollar. The first three months of the current year, the commercial balance (difference between exports and imports) increased their deficit by 2.1 billion dollars over 2014.

On the other hand the purchase of Treasury bonds [long term] has fallen as the performance falls and the bubble dimensions of the junk bonds increase. There is no doubt that the rest of the world cannot continue indefinitely to finance the twin deficits (commercial and budget) of the US economy.

To sum up, after seven years, in spite of the employment of an enormous quantity of instruments and resources to overcome one of the greatest crises of capitalism, the economic and political elites of the United States face greater risks even as they proclaim a recovery that is hardly convincing.

Leer versión en español:  La recuperación que no alcanza

(Translation by Jordan Bishop)

*Ariel Noyola Rodríguez is an economist from the Autonomous National University of Mexico. Contact: Twitter: @noyola_ariel


Contralínea 441 / del 15 al 21 de Junio 2015