‘Austerity’ might be the buzz word in the eurozone, but it remains to be seen whether the British government or any EU government following harsh austerity measures will grow. The UK is now facing the threat of a downgrade from credit ratings agency Moody’s The important question is can the UK or any government return to stronger economic growth while making drastic budget
The US is on the Right Course
cuts.
In the US, where government debt has already been downgraded by Standard & Poor’s, the Obama administration hasn’t embarked on such deep austerity measures. The US economy has been showing much stronger growth, with US gross domestic product (GDP) growing at 2.8% in the last quarter of 2011, compared with a contraction of 0.2% in the UK.
Today’s economic data reported that the number of U.S. workers making new applications for unemployment benefits fell last week to the lowest level in nearly four years.
The government reporting initial claims for unemployment benefits fell by 13,000 to a seasonally adjusted 348,000 last week, the lowest since March 2008. Other reports had housing starts up 1.5% last month, while wholesale prices climbing 0.1% in January.
There has to have a balanced view. The UK might be the poster child for balancing the budget, but they are not growing. Politicians shouldn’t undervalue the fact that economic growth and becoming more positive are good things, and need to be balanced with austerity.
The US will not have very strong GDP numbers but this year but the economy will grow at about 2%. What is encouraging is that there are signs of a renaissance in industrial jobs within America and manufacturing.
However the US is not without its problems: the public deficit stands at $15.3 trillion. There is currently no unified plan to tackle this debt with presidential candidates skirting the issue ahead of this year’s elections. It is a political hot potatoe and will need to be addressed sooner then later.
The US is clearly right in the thick of electioneering at the moment, and most of what politicians are saying bears no regard to the impact it will have on the deficit, but that’s elections. Once the elections happen there’ll be a re-evaluation of the deficit and the actions will be taken. But progress should be made this year.
As economic reports continue to show that America is making a comeback, growth will also help reduce the deficit. Most businesses and government spending has been streamlined during these years of economic hardship, making them leaner and more profitable as the tide turns.
Originally posted here
