America Is Driving the World Financial system. When Does That Change into a Downside?


In the math of the world economy, a foreign tourist staying in the United States is essentially buying an American export of services. Travel exports were just $ 18 billion in the first four months of 2021, up from $ 67 billion in the same period in 2019.

Meanwhile, American consumers have shifted their spending away from services and towards goods. In the first four months of the year, consumer goods imports were 29 percent higher than in 2020, an increase of $ 57 billion.

“The only thing people could consume was goods,” says Constance Hunter, chief economist at KPMG. “You couldn’t have a wedding, you couldn’t go to a baseball game. So what did people buy? You bought goods, and that is much more of a global market than services. “

In fact, the United States and China are driving the global economy while the rest of the world is further behind in recovering from the pandemic.

The IMF’s World Economic Outlook, published in April, forecast that U.S. GDP in 2021 will be 3 percent above 2019 levels, while China was forecast to be 11 percent above 2019 levels. But the Eurozone and Japan were well on their way to making their economies 2 percent smaller than in 2019, with the UK, Canada, Brazil and Mexico also going to be in negative territory.

This is unfortunate for the local people, who are sluggish to recover, but it is likely to keep the supply shortages in many sectors from getting worse. A shortage of semiconductors has already hampered automobile production today; Shortage of building materials has suppressed housing construction; and a shortage of shipping containers has driven the prices of goods across the oceans soaring.

“If everyone is stimulating at the same time and everyone is enjoying peak growth at the same time, you could see more congestion,” said Nathan Sheets, chief economist at PGIM Fixed Income and former top international economist with the Federal Reserve and the Treasury Department.