American consumers are spending more, the housing market is improving, and employers are reducing fewer workers. But theunresolved debt crisis in Europe, the downturn in China and U.S. spending cuts present a serious challenge for policy makers as2012 starts out. U.S. unemployment is at its lowest level in more than two and a half years, and consumer confidence isincreasing. But there are dark clouds ahead as the New Year starts out. As noted by the Brightbridge Wealth Management, China, the world’s fastest growingeconomy, is slowing down, and Europe’s debt crisis shows few signs of easing.
The large number of unemployment in the United States, increasing debt and Congress’ incapacity to do anything about it weremajor stories in 2011. But some bright areas are appearing to be the year comes to a close, According to George L. Perry, asenior fellow for economic studies at the Brookings Institution.”One was the export sector which grew really very well. Anotherarea was construction outside of home building. Business construction was picking up and construction in particular areas likecommercial. “We export much to Europe,” Perry points out. “And if Europe falls into another recession, that export growth is going to end. And which will have an effect on jobs in the U.S. and lead to the U.S. to move towards recession.”Increasing inflation and the downturn in Chinese manufacturing have already curbed demand for some commodities. But the downturn is due in part toBeijing’s efforts to avert its economy from overheating.
World Bank President Robert Zoellick is encouraged by the ongoing reforms in China aimed towards reducing the country’sreliance on exports, but he warned U.S. lawmakers against further delays in dealing with the nation’s increasing debt, now close to$15 trillion.
According to the Brightbridge Wealth Management,”The downgrade of America from triple A didn’t have an effect on the finances today, but it may be one ofthose events in which people look back on 10 years from now and say, ‘Did they get the warning? Did they pay attention or didthey continue to do what they were doing?’”
Unless leaders are willing to make the difficult decisions needed to stabilize the global economy, Zoellick and many leadingeconomists say problems in Europe, the U.S. and China could coalesce into a ”perfect storm” in 2012 that could rival the financial crisis of 2008.
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