Jun 19, 2011

The Slow Economic Recovery

Some of the slow-down in the American economy is undoubtedly due to problems in the world economy: the excessive Greece debt and other serious economic problems facing a slowly growing European Community, the nuclear disaster in Japan and the sluggishness of the Japanese economy, and the possible slowing of the rapid growth in both the Chinese and Indian economies. Another part is explained by the policies that slowed the early stages of the recovery, perhaps especially uncertainty about the effects of the financial reform act, and lack of clarity about the cost implications to business of the health care act.
There are some elements that I will add to those explained by Professor Becker:

1) Companies moving out of the US looking for lower costs (with high quality) abroad, especially to China, India, Brazil, and Mexico.

2) Lower global demand for US manufacturing products (services), now mainly imported from China (India). 

3) The still very rigid immigration policies by the US that keep labor costs relatively high. 

Even though the US fiscal policies and probably monetary policies are to blame for this crisis, I wonder how much of it is due to a global economic restructure, with economic activity moving to other parts of the world. 

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