(Market Watch) The U.S. economy is being weighed down by slow growth around the world. In normal times a steady pace of hiring and consumer spending would mean the economy is doing great. But these are not normal times.
American companies continue to hire workers at a rapid clip — more than 200,000 new jobs a month. All the people now working and earning paychecks helped to boost consumer spending in 2015 to the fastest rate in a decade.
That hasn’t translated into stronger U.S. growth, though. The economy expanded at a measly 1.4% rate in the 2015 fourth quarter and it could do even worse in the first three months of 2016.
A pair of Federal Reserve GDP trackers signal growth of 1.1% or significantly less. The government will issue preliminary first-quarter results in two weeks.
Consumers account for more than two-thirds of what goes on in the U.S. economy. They can’t carry the economy all by themselves, however, when other key contributors to growth are underperforming.
The biggest drag on the U.S. is outside the nation’s borders. The global economy slowed last year and the International Monetary Fund this week predicted a stagnant 2016.
One reason the global outlook has darkened, argues chief economist Carl Weinberg of High Frequency Economics , is a worldwide glut of oil, grain, steel and other key commodities.
The world is producing so much stuff that it’s driven down the price of many goods whose sales are critical to the economies of developing nations. When prices fall, those countries cannot buy as many goods and services from major exporters such as the U.S. and Europe.
Thus the disease of weak growth spreads.U.S. exports slumped badly in 2015, a reversal made worse by the surging value of dollar that increased the cost of American made goods and services. That helps explain why gross domestic faltered in the fourth quarter and is likely to do so again in the first quarter.Lower commodity prices aren’t just hurting developing nations, either. The once-sizzling U.S. energy sector has cut more than 100,000 jobs over the past year to cop with cheaper oil. And American farmers are hurting, […]