Bloomberg: Relying on the United States to support the global economy isn’t safe
Bloomberg said that relying on the United States to support global growth poses risks to other countries, as well as to the United States itself.
Consumer prices jumped at the beginning of the year, halting recent progress in combating inflation and disappointing investors who had hoped the Federal Reserve would begin lowering interest rates soon.
High interest rates in the United States help keep borrowing costs high around the world, and this is a particular problem for emerging economies that have borrowed in dollars.
An IMF analysis last year found that a 10% appreciation of the dollar reduces emerging economies’ growth by 1.9% after one year, and hurts trade, credit availability and stock market performance.
The continued strength of the US economy isn’t a given, and some weakness has already become clear.
Small business optimism last month suffered its biggest decline in more than a year, hurt by deteriorating profits and shrinking sales expectations, according to the National Federation of Independent Business.
On the other hand, Americans also carry larger credit card balances, which affects low-income families in particular.
