Rebalancing the Economy
By Robert Samuelson
Newsweek
WASHINGTON -- This just in: Caterpillar -- the maker of earth-moving equipment, including bulldozers and monster mining trucks -- reported first-quarter profits of 55 cents a share, up from a loss of 19 cents a year earlier. More important, the improvement stemmed heavily from much higher demand from developing countries. Although machinery sales dropped in North America and Europe, they rose 40 percent in Asia and 7 percent in Latin America. With more exports, Caterpillar is hiring again. The U.S. job increase, though only 600, contrasts pleasantly with the roughly 10,000 layoffs since late 2008 that had reduced the company's American workforce to about 43,000.
What's significant about this is that it suggests a much-desired "rebalancing" of the global economy. The world needs a new engine of growth to replace free-spending American consumers and their ravenous appetite for other countries' exports.
Greece's plight and Europe's broader debt problems are a harbinger: Advanced countries can no longer borrow their way to prosperity. Hence, rebalancing. Developing countries, especially in Asia, that pursued export-led growth would shift to domestic spending. The debt-ridden American and European economies would rely more on exports to these countries. Almost everyone, even China, favors rebalancing in principle. But can it happen?
By some measures, it seems under way. China, India, Brazil and many "emerging-market" countries escaped the worst consequences of the Great Recession. Their economies are generally growing much faster than ours (6.4 percent annually in 2010 and 2011, compared with a 2.9 percent rate for the United States, reckons the International Monetary Fund). This boosts their demand for the advanced equipment, instruments and basic industrial supplies (chemicals, coal) that constitute two-thirds of U.S. exports. Of Boeing's 3,350-jet backlog, slightly more than three-quarters (77 percent) will go to foreign customers.
(More here.)
Newsweek
WASHINGTON -- This just in: Caterpillar -- the maker of earth-moving equipment, including bulldozers and monster mining trucks -- reported first-quarter profits of 55 cents a share, up from a loss of 19 cents a year earlier. More important, the improvement stemmed heavily from much higher demand from developing countries. Although machinery sales dropped in North America and Europe, they rose 40 percent in Asia and 7 percent in Latin America. With more exports, Caterpillar is hiring again. The U.S. job increase, though only 600, contrasts pleasantly with the roughly 10,000 layoffs since late 2008 that had reduced the company's American workforce to about 43,000.
What's significant about this is that it suggests a much-desired "rebalancing" of the global economy. The world needs a new engine of growth to replace free-spending American consumers and their ravenous appetite for other countries' exports.
Greece's plight and Europe's broader debt problems are a harbinger: Advanced countries can no longer borrow their way to prosperity. Hence, rebalancing. Developing countries, especially in Asia, that pursued export-led growth would shift to domestic spending. The debt-ridden American and European economies would rely more on exports to these countries. Almost everyone, even China, favors rebalancing in principle. But can it happen?
By some measures, it seems under way. China, India, Brazil and many "emerging-market" countries escaped the worst consequences of the Great Recession. Their economies are generally growing much faster than ours (6.4 percent annually in 2010 and 2011, compared with a 2.9 percent rate for the United States, reckons the International Monetary Fund). This boosts their demand for the advanced equipment, instruments and basic industrial supplies (chemicals, coal) that constitute two-thirds of U.S. exports. Of Boeing's 3,350-jet backlog, slightly more than three-quarters (77 percent) will go to foreign customers.
(More here.)
Powered by Blogger
0 Comments:
Post a Comment
<< Home