How Will Weak US Economy Affect Us?

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There are not many happy headlines this morning in the US after markets opened sharply lower on reports that “The U.S. economy slowed in the first quarter to one of the weakest paces of the five-year recovery .”

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Against an expectation of a 1.1% increase in GDP, the US gained a mere 0.1%. Combine that with news out of China that it’s economy, which was expected to overtake the US by 2019, may reach that historic milestone before this year is over. As of this moment (15:12 UTC):

  • The Dow Jones is down 0.01% to 16,533
  • The S&P is down 0.20% t0 1,874
  • The Nasdaq is down 0.65% to 4,076

For many, the evidence is in, and the handwriting is on the wall. The US has been weighed in the balance and has been found wanting by virtue, not of the global economic crisis, but by the “benevolent” ineptitude of the Obama administration’s handling of it and every other crisis it has made worse by trying to fix everything on the road to “Hope and Change.” (TARP = Failure. ARRA = Failure. Solyndra = Failure. Benghazi = Failure. Iran, Israel, West Bank, Syria, Crimea = Failure. Snub Mubarak, support Morsi = Failure.)

I could say that Obama is the US’ problem. He is. But the repercussions from the combination of his administration’s agenda and incompetence have had, and will continue to have, deleterious effects on the entire world.

What Now?

There are events that are fairly predictable, both in the near and long terms. The more immediate include:

  • the administration taking the position of blaming the weather (or anything else, for that matter) for the slower than expected first quarter growth
  • the administration hyping the monthly job report as an indicator that everything else is not as bad as it might seem
  • world markets responding in kind over the next spin of the earth on its axis.
  • investments being shifted geographically

I am not a prophet or a seer. These just seem obvious. The fact is that the US markets could rebound during the day. I do, however, fear that people will not believe that the jobs report is a bone fide indicator of the health of the US economy. As I have said before, it is not an accurate indicator. It was never intended to be.

I strongly believe that one day does not make a week, one week does not make a month, and one quarter does not make a year. But I just as strongly believe that we reap what we sow. The acceleration of the potential crowning of China as the leading global economy is an indication that the fruit is ripening earlier than expected, having fertilized  the ground with the of “The Audacity of Hope.”

Once China becomes the world’s leading economy, a series of unfortunate events shall begin to unfold that will affect US markets, world markets, and potentially knock the US dollar from its long-exalted position in the global economy.

I can’t read the tea leaves, but I am confident that it is right to raise a yellow flag so that we all keep a closer eye on a potentially volatile situation.

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