2015 and the future of the US economy

January 16th, 2015 – Article previously published in the blog “US and emerging markets” CincoDí

The United States has completed 2014 with an annual growth of 5%. In terms of GDP. Domestic consumption, investment, exports have contributed strongly: both domestic demand and external demand.

The World Bank, as other international institutions: IMF, OECD, European Commission predicts in its report of January 2015, the United States will be the main engine of global economic growth. The Economist and Business Week, December 2014, economic and business weeklies held the same view.

Throughout the period from June 2009 to December 2014, the US economy has been gaining strength in terms of growth and employment. In 2014 both parameters have begun to resemble those of “the Clinton era”. In 2014, 3 million jobs were created in the United States: the best figure since 1999. The monthly average was 224,000, although in November were 353,000 and 252,000 in December. The unemployment rate has been reduced to 5.6%: it is almost half what it was in the beginning of the crisis, when unemployment reached 10.2%, and each month they were fired between 800,000 and 900,000 people in the second half of 2008 and the first half of 2009.

Almost all economic sectors have contributed to job creation, starting with 52,000 in professional services and information technology. But building the 48,000 or 34,000 in health services. It has increased full-time employment (more than 400,000 workers have succeeded), although the participation rate remains relatively low at 62.7% and -month wages for the month from November to December 2014 have decreased the 0.2%, increasing by 1.7% year.

It is true that low inflation and a sharp decline in the cost of gasoline have put more money in the pockets of Americans, increasing their purchasing power and purchasing power. That is, that while wages have not increased significantly in 2014-during the six years of recovery grew by 4%, versus 8% of the time of Clinton, US households have more money to consume and save due to strong containment and lower prices in some cases.

The Federal Reserve (FED) has pressures to act. Also have for not acting. The Wall Street Journal and Bloomberg did in late 2014 surveys hundred economists, respectively, on forecasting the December unemployment data and, in both cases, fell short: anticipated job creation of 240,000 jobs 252,000 and no. They also thought that the unemployment rate would rise from 5.8% in November to 5.7%, when the reality was better, 5.6%. These same-hundreds of them economists anticipate that 2015 and 2016 will be good years for the US economy.

Hence the pressure on the Fed to act. Ben Bernanke, first, and Janet Yellen then searched for an annual economic growth of 3% and the unemployment rate down to 5.5%. Both goals are on track to be achieved. And the Fed has several mandates: ensuring economic growth with job creation on the one hand, and price stability, on the other. The first is aimed, after six years of subdued growth, but almost uninterrupted. And the inflation target is controlled: below 2%, as the Fed wants.

The extraordinary measures taken by the Federal Reserve and the US government may begin to lose its meaning. First was the Quantitative Easing, so that one has been gradually reducing the purchase of government and mortgage debt; and now could be the shift in interest rates, which have been at around 0% for six years and, perhaps, in the second half of 2015, could begin to rise again.

Stock markets live moments of euphoria, with the DJ (Dow-Jones) at historic highs, as the Nasdaq and the SP-500. Usually, all stock indices have reached formidable levels over the past two years. The housing market has been revitalized again, with strong regional differences, as shown in the Case Schiller index, and in Silicon Valley a new fully immersed in the digital environment successful business landscape, born in this new environment, and still appears the successful trail opened by companies that already generate many benefits, such as, Facebook, Apple and Google.

It is no longer about what made the famous “” 1999, 2000 and 2001, which ruined many, and defrauded great expectations, then, the world was not digital, but today, fifteen years later, markets consumer, corporate and small and medium enterprises (SMEs) are fully immersed in the business models of the Internet, new platforms, cloud, big data, mobility and social networks as tools to be more productive and competitive. People can not live without technology in mobility and be fully, always connected. The need for information is constantly updated. As explained Eric Schmidt and Jared Cohen in “The New Digital Age”, Internet has redefined the future of people, business, politics and the concept of how to participate in democracy by citizens.

Chronicle of Recovery

Throughout these pages, makers of American economic policy have helped us understand how America has emerged from recession and has become to reinvent. We have done the hand of Ben Bernanke (“The Federal Reserve and the Financial Crisis) from the Federal Reserve. Also with his colleague Timothy Geithner as Treasury Secretary 2009-2013 (“Stress Test: reflections on financial crises”). Michael Brunwald helped us understand and assess the economic stimulus package in February 2009 amounting to 787 billion dollars that saved the US economy from the abyss and avoided a depression like that of 1929 (“The new, new deal”). The oracle of the Federal Reserve, Alan Greenspan, whom we turn in earlier writings, has helped us to value the ability of predictability of the economy, when the duties are done well (“The map and the territory. Risk, Human Nature and the Future of Forecasting “).

The Nobel prize winning economist, Joseph Stiglitz, in “The Price of inequality” far more than the famous Piketty on “Capital in the Twenty First Century” – explained very well the strong differences in income between rich and poor that generated the crisis, and how the American middle class has been the great suffering of the recession.

For us, the great chronicler of the crisis has been the former adviser to Bill Clinton, Alan S. Blinder, his magnum opus “After the music stopped: the financial crisis, the response, and the work ahead”. Finally, Thomas L. Friedman, with Michael Mandelbaum – “That used to be us: how America fell behind in the world it invented and how we can come back” – have taught us that, from the time of the 2008 recession and 2009, when it seemed that everything was sunk, and that America had lost its economic primacy in the world, until now, has driven a part where the landscape has changed dramatically.

True, China has played an essential role in these years, and has sought to exercise their economic, political and geostrategic influence in the world, taking advantage of the United States was experiencing a deep recession and losing ‘lives and money “(Geoffrey Parker) in East Medio. We recalled David Shambaugh in “China Goes Global”. But China-the anticipated three years ago, and publish it to not have doubt- is experiencing a mild slowdown in growth, and will increasingly, because their economic and non-inclusive political foundations are weak (“Why nations fail. The Origins of Power, Prosperity, and Poverty “by Daron Acemoglu and James Robinson). By contrast, the United States is growing strongly again, and became the economic engine of the world.

This work is an explanation of the root causes, of the reasons and consequences of the US economic recovery, which bases between 2009 and 2012 were made and there has been a process of consolidation between 2012 and 2014. The next stage, between 2015 and 2016 will be strong spurt of economic growth and job creation. In these years, has been a Democratic president, Barack Obama, who has taken adequate cures to return to the path of prosperity. So we listened to his second election victory in November 2012: the victory of an American president-and his legate not insured if culminate two terms, as is happening to Obama.

In the past six years, the economy has been the primary concern of Americans. It always is: on hard, and thin. It’s in their blood. Therefore, in this work we paid primary attention to the economy, versus our other writings on international relations and domestic politics played a major role.

2015 is the year to kick off the race for the White House. There will be presidential elections in November 2016. In his second memoir, (“Hard Choices”), Hillary Clinton says she has a difficult decision to make, whether it is presented as a candidate for election or not. All surveys take it for winning, at least for the Democratic side. On the Republican side, there are many potential candidates: Jeff Bush, Marco Rubio, Ted Cruz, Mike Huckabee, Mitt Romney, Rand Paul, and many more. Be the most expensive election in history, with candidates spending huge amounts of money in the election campaign, both primary and presidential elections.

Nobody knows who will win, but all polls today take for winning to Hillary Clinton. Anyway, the economy will be discussed with certainty. And hopefully, as we did in 2008 and 2012, being very close to the United States, as now, to live and write.