The current wave of new conservatives, that have become the prominent voice of the right-wing in America, carry with them a great ideological passion. These conservatives have been vocal supporters of many policies that are often congruent with the neo-liberal viewpoint. Such policies include a laissez-faire economic approach and small government; both of which are aligned with the economic rationalist approach. They have also ardently maintained their pro-family, pro-community rhetoric in a time when they say these values are being tossed aside by an increasingly liberalised America.
It is now 5 years into the US recovery after the severe recession of 2008-9, unemployment has fallen to 6.7% and quarterly GDP growth remains between 1-2%. At first glance the recovery finally appears to be picking up momentum, with stronger then expected growth in the last half of 2013.
Looking at the longer term trends however, any optimism is quickly expunged as it appears the US is performing far below its potential. The IMF outlook for 2013 shows actual GDP to be more than 4% below potential GDP.
With the US debt ceiling talks and the new Chairman of the Federal Reserve (Fed) Janet Yellen dominating the business and economics headlines, the economic woes of the US are back in the spotlight. It reminds us of the sluggish and vulnerable economic recovery that the US is currently facing on the back of ongoing Quantitative Easing (QE) monetary stimulus. Despite the debt standoff and the likely continuation of QE as Yellen leans towards employment over inflation, what is still a looming concern is the eventual exit of the QE program by the Fed. Due to the risks of a disorderly exit, the process is made more complex as timing, pacing and communication all need to be carefully managed, and both implications for the US economy and the potential collateral damage around the world need to be considered.
One of the things that struck me most while on exchange at the University of North Carolina (UNC) is that it really is like being in a movie. While there are no meticulous canteen table partitions according to social status, on the playing field, which is where college spirit bursts forth – in the same zeal as American patriotism – the image is exactly like those scenes in Remember the Titans, Rudy, The Blind Side, etc…
What a joke.
Really, there isn’t anything else that can be said about the latest fiscal crisis in the United States. With the federal government shutting down most operations on the 1st of October, as the House of Representatives (controlled by the Republicans) and the Senate (controlled by the Democrats) couldn’t agree on a Continuing Resolution for the 2014 fiscal year.