Despite a series of detrimental factors and the precarious position of the American President, the U.S. economy is powering ahead. After a gdp growth rate of 1.6 percent in the second quarter of 2016, the growth rate has risen to 2.1 per cent in the second quarter of 2017. This good growth performance is accompanied by a growth rate of two per cent in Euro Area and 1.5 per cent in Japan. Even the United Kingdom, which is afflicted by the fallout from Brexit, obtained a growth rate of close to two per cent in the second quarter of 2017.
Despite the continued policy of quasi-zero interest rate in the industrialized countries and the massive expansion of central bank money over the past couple of years, price inflation does not yet show up. For the Euro Area the figure is 1.2 per cent, while consumer prices in Japan increased by 0.4 percent. Only the United Kingdom is an exception, where, largely due to the Brexit, consumer prices are on the rise and the annual inflation rate reached 5.1 percent in July 2017.
Central banks in the industrialized countries continue with their zero-rate interest rate policies. Despite various announcements that the time has come to end “quantitative easing” and to raise rate finally, central bankers are still too scared to provoke an unwanted sharp economic downturn when rates rise. As a very problematic result of this policy, the global stock markets have obtained extreme valuations and show signs of a mega bubble.
In combination with the strong performance of the US economy, the unemployment rate in the United States is at a low of 4.7 percent. This rate is well below the level in the European Union, where the unemployment still stands at 9.1 per cent, particularly because of the ongoing economic weakness at the Area’s Southern fringes where unemployment rates are as high as 17.2 per cent (Spain) and 21.2 percent (Greece). Japan’s unemployment rate has been remarkably low despite relatively low growth over the past decades and currently stands at 2.9 percent.
In the United States, the current account deficit amounted to 2.5 percent of the country’s gross domestic product while Japan registered a current account surplus of four per cent and the Euro Area of 3.9 per cent in the first quarter of 2017. Due to recessionary tendencies after its Brexit vote, the British current account deficit fell from 5.4 percent in the first quarter of 2016 to 3.4 percent in the first quarter of 2017.