...I thought the experts said the U.S. was decoupling from the rest of the world --
"Europe Imperils U.S. Sales From Chemicals to PCs: Economy" (BusinessWeek)
American exporters from Dow Chemical Co. to Hewlett-Packard Co. are preparing for a further decline in demand from Europe as the region’s deepening debt crisis threatens to derail a source of strength for the U.S. economy.
JPMorgan Chase & Co. cut its forecast for second-quarter growth to 2 percent from 2.5 percent last week, in part because of a deteriorating trade balance. Earlier this month, it lowered its third-quarter estimate to 2 percent from 3 percent, “with much of the downward revision accounted for by an expectation that the pace of export growth will slow,” chief U.S. economist Michael Feroli said in a June 1 research note.
U.S. exports to the 27-nation European Union dropped 4.8 percent in the year ended April, the worst 12-month performance since November 2009, Commerce Department figures show. By comparison, total U.S. exports were up 3 percent in April from the same time last year. The slump in Europe coincides with slowing growth in other major markets for U.S. goods, such as China and Brazil.
“The decline in Europe will weaken our exports over the long term,” said Michelle Meyer, a senior U.S. economist at Bank of America Corp. in New York. “We look for the trade deficit to widen not only to the euro zone but developing economies as well,” she said, consistent with their forecast that the U.S. economy will slow to just 1 percent growth by year-end from the 1.9 percent annual pace in the first quarter. --
...and that deficit spending would help our economy --
"Study: Long-Term Deficits Are Linked to 24 Percent Lower Growth" (The Washington Post)
What’s the real harm of a massive government deficit? Carmen Reinhart, Vincent Reinhart, and Kenneth Rogoff find that high public debt is associated with a significantly lower level of GDP in the long run.
In a new paper for the National Bureau of Economic Research, the researchers examined the historical incidence of high government debt levels in advanced economies since 1800, examining 26 different “debt overhang episodes” when public debt levels were above 90 percent for at least five years.
The National Debt Clock. (Andrew Burton/GETTY IMAGES) The debt episodes included everything from Netherlands’ Napoleonic War debts and the Japan banking crisis of the 1990s to Greece’s current fiscal crisis. On average, the researchers found that growth during these periods of high debt were 1.2 percent lower on average, consistent with Reinhart and Rogoff’s findings in 2010. What they also found, however, was these episodes of high debt and lower growth were quite lengthy, averaging 23 years. And the accompanying long-term drag on GDP was substantial. “By the end of the median episode, the level of output is nearly a quarter below that predicted by the trend in lower-debt periods,” they explain. --
...and that our economy was on the mend?
A massive majority of likely voters fear America could be slipping into a second economic downturn just four years after the Great Recession, according to a new poll for The Hill.
Amid worrisome jobs numbers and the looming threat of a eurozone crisis, the survey found 75 percent of people were either very or somewhat worried the country is headed toward another recession.
Among those concerned, 46 percent said they were “very” worried and 29 percent said they were “somewhat” worried.
I guess all those "experts" are...but-heads?