“Today’s program asks if the global economy is slowing. Mike, although growth in the U.S. economy has been very good recently, we do live in a global economy. This means economic conditions in other countries can impact our growth rate. I understand there is evidence of some issues in economies of some major countries. What are they, and are they severe?”
“Well that’s a really good question. It’s a question that a lot of people are asking, particularly people in this country. If we look at the economies for example of Germany and Japan. They’re among the top five in terms of size. They’ve actually recently contracted. They’re in a slight recession.”
“China of course is the second largest economy. It’s been growing very fast, but it’s growth rate has slowed down considerably. Bank lending there is actually down. So we do have a little trouble there in the past for those three economies. Now of course one quarter doesn’t make a trend, and there were some one-time factors, I think, in both Germany and Japan.”
“Still we have this continuing trade dispute, some call it a war, with China that’s impacting the world economy and is causing some global concerns about global growth. Meanwhile our economy does continue to chug along. We’re growing somewhere between three and three-and-a-half percent on an annual basis. That’s very, very good.”
“Even if we do have disruption in world trade, world trade is important to the U.S., but it’s much less important than it is for example the three countries I mentioned: Germany, Japan and China. So even if trade, or the lack of trade causes those countries to contract or slowdown, it’s not going to have the same impact on the U.S. economy because a much larger part of our economy is based on domestic production and domestic buying.”
Mike Walden is a William Neal Reynolds Distinguished Professor and Extension Economist in the Department of Agricultural and Resource Economics at North Carolina State University who teaches and writes on personal finance, economic outlook and public policy.