Minton-Beddoes: Economy growing, but slowly
The economic future for the United States is somewhat enlightening, but not overwhelmingly optimistic, said Zanny Minton-Beddoes, the economics editor for “The Economist.” She spoke to an audience of mainly retirees Dec. 3 in the auditorium of the Upper St. Clair High School during the most recent Town Hall South lecture.
Speaking in a rapid, clipped British accent, Minton-Beddoes said the U.S. economy is growing, but not very fast.
After many financial recessions, the economy, regardless of the country, produces a “V” shape, where the graphs plunge down, hit bottom, then rise rapidly to about where the economy was before the recession.
Not so with the most recent economic downturn in the U.S. She referred to the recovery as “lackluster.” There has been no rapid bounce back to the top of the “V.”
Wages are basically stagnant, unemployment is high and many of those who lost their jobs during the recession are no longer working and are dependent on working family members.
Financial woes are not restricted to the U.S., Minton-Beddoes said. What’s happening in the U.S. is happening in other parts of the world, like Europe – especially in Greece, where unemployment among the young is 60 percent. In Spain, unemployment for the youth is at 50 percent.
“They could become a lost generation,” Minton-Beddoes said. “It’s a shocking waste of talent.”
The same is true in Egypt, which has the youngest population in the world, yet most are unable to find work, she said. Japan is trying to pull itself out of a two-decade long recession and while China, which has the second largest economy, continues to grow, there are signs of a slowing financial base.
Referring to China, Minton-Beddoes said, “It is going to have a hard landing.”
When she visited China for the first time in 1992, she said there were only bicycles for transportation. Now, cars are everywhere and skyscrapers are being built.
China, she said, relies on export and investments for its continued growth, but the population is aging. China is improving its infrastructure and taking other means to encourage the population to spend more money. While the Chinese are thrifty, the U.S. population spends more money.
“There is a huge explosion of credit in China,” Minton-Beddoes said. “The Chinese save more than half of their income in a year.”
If China crashes economically, the entire world would be in trouble, she said.
The world economy, at one time, was driven by the U.S. Currently, the emerging world nations are in charge, like India and Brazil. And while the Brazilians thought their economy was stronger than it actually was, Minton-Beddoes said, Brazil “still has a huge potential.”
European countries that use the euro as currency need to become better organized. The “bubble has burst” in Greece, Italy, Portugal and Spain.
“Surprisingly, the U.S. is the least dirty shirt in the laundry basket,” Minton-Beddoes said.
There is no way to accurately predict future trends, but there are areas to watch.
Natural gas reserves will help to boost the U.S. economic standing. Already, natural gas prices are four times lower than in Europe. There “is a lot more to come,” she said of the shale reserves, and that will help to reshape the U.S.’s competitiveness in the energy field across the globe.
The U.S. should be more cautious about trade agreements, that may shift to a more regionalization approach, she said, and technology will change how the population receives information.
Aging populations will influence decisions.
“Japan sells more adult diapers than baby diapers,” she said.
The U.S. needs to invest in education, including pre-school education.
“More Chinese children go to pre-school than those in the U.S.,” she added.
And while the world appears to be on shaky financial ground, Minton-Beddoes said, even with its difficulties, in the short term, the U.S. “looks to be the best.”