How Does The U.S. Economy Stack Up?
Many comparisons are being made among the U.S. economy and the economies of the rest of the world, particularly China. In recent years the U.S. economy has been resilient. Sixteen straight interest rate increases, a terrorist attack, the Gulf Coast being devastated, change of Federal Reserve Chair, oil shocks and a quagmire in the Middle East are enough to bring the economy to a screeching halt.
The bright side is that the U.S. is still a powerful economic force. Our economy generates more in one day than one half of the economies in the world. Currently many are making comparisons of the U.S. economy to China. The U.S. economy produces more in one 28-day period than the Chinese economy produces in one year.
However, before we make too many accolades, China is emerging as a steady force. Alliances with Africa, South America, Japan and the ASEAN group of Southeast Asia will have them knocking on our economic door.
China’s WTO membership and domestic reforms have led to economic growth. The volume of trade between the U.S. and China is $328 billion, 10 times the level in 1992. China is buying computers and auto part companies, amongst others. Any attempt to block these acquisitions could lead to challenges, particularly as they are sitting on over a trillion dollars worth of resources.
To any of you ag producers utilizing steel products, China alone has accounted for 54% of global steel demand. With an economy growing at 10% annually since 1991, the big economic force is going to be difficult to stop.
Management Tip of the Week:
One must think globally, but bring the insight and information down and act locally.
Editor’s note: Dave Kohl, The Corn And Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at [email protected].