A Festering Pessimism In US And Other Developed Nations

People in nations with the most developed economies are extremely pessimistic about the future financial health of their countries, according to a new poll by the global research firm Ipsos Mori.

Only 18% of Americans think the nation’s economic prospects are good or somewhat good. The only countries with worse numbers were the UK at 13% followed by France, Japan, and Spain. The poll covered 19,000 citizens in 24 countries.

It is probably not surprising that the most optimistic citizens were those of India at 85%, China at 77%, and Brazil at 65%.The data may be misleading.

The prospects of the global economy, especially those nations which are developing and those which are developed, are not as “decoupled” as experts have argued for several year. China’s economic output hit an 11 month low in July with only a 13.4% improvement over the same month last year. And, inflation rose 3.3%, the highest rate in 21 months. The production figure looks a great deal like it did while the world’s economy was still in a recession.

China’s balance of trade for July showed a slowing of imports, a sign of weak consumer spending. The July inflation figures show why. Higher costs are eroding consumer buying power. China’s improvement in exports cannot last if consumers in large nations like Japan, the UK, and US do not like the chances that their prospects will improve.

Confidence is very often short-lived. It is easy to feel effervescent when there has been a short burst of economic activity. Many economists in developing nations believe that their countries have shot out of the global downturn like rockets. The global recovery can be uneven, but only for so long. The large economies of the US, Japan, and Europe have become a boat anchor that is too heavy to be offset by what appears to be for now a rising tide.

Douglas A. McIntyre