yet more on money

Not long ago, many experts were convinced that a vibrant world economy would prevent an American recession. Even if the beleaguered American consumer suddenly turned thrifty, they reasoned, healthy spending on other shores was supposed to keep the expansion rolling.

But now, with the turmoil in financial markets resonating around the world, those same experts see signs that economic growth abroad will probably not be strong enough to prevent the United States from slipping into a recession.

Indeed, the very global interconnections that many thought might spare the United States now appear to be working in reverse: American consumers will pull back from their exuberant spending, cooling demand for goods worldwide, dragging down the global economy. This could in turn stifle foreign demand for American goods.

“Exports had been seen as the one strong sector of the American economy,” said Alan Ruskin, chief international strategist at RBS Greenwich Capital. “Now there’s a sense that the American contagion is spreading abroad.”

~ by sanjuanjohn on January 25, 2008.