The US economy has avoided the drag of weak global markets and remained relatively consistent in the face of a slowdown abroad. But that steadiness may not last long.
Wednesday, October 22, 2014
Several factors that impact European and Asian economies might turn the US economic growth around.
Low interest rates and oil prices benefit businesses, households and consumers. But falling foreign demand, weak credit and a strong US dollar put pressure on exports, international sales and business investment.
Those setbacks are just the beginning. Geopolitical concerns in Ukraine and the Middle East can also shake markets – not to mention growing fears over an Ebola outbreak. But for the time being, the US is the primary driver of the global economy.
“The US is, for better or worse, the growth engine of the world economy right now,” Adolfo Laurenti, chief international economist for Mesirow Financial in Chicago, told The Wall Street Journal. “But with many other regions not performing, we may have some limit to how much momentum we can gain.”
Economists at Goldman Sachs predicted the US gross domestic product growth rate will falter by 0.3% through 2015 and most of 2016. However, that measure presumes the current weakness in stocks and bonds will hold. If not, the loss would be closer to 0.15%.
US stocks open higher but fall soon after
According to Market Watch, the US stock market inched higher at Wednesday’s open, with the S&P 500, Dow and Nasdaq each gaining 0.1% or less. But within a few minutes, the indexes each turned downward and entered negative territory. As of 9:41 AM EST, the Nasdaq fell 0.22% while the Dow and S&P 500 each declined less than 0.1%.
There may be little activity for Wednesday’s trading following two day of strong upward swings, Bloomberg reported. “It might be kind of a slow reflection day today,” Randy Bateman, the chief investment officer of Huntington Asset Advisors, told Bloomberg. “We’ll probably just have a little digestion from yesterday. Right now, we’re looking at earnings being the driving force of this market. There will be winners and losers.”
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