Published by KTAR.COM
Summary generated on August 12, 2020
Now the global economy is waiting for the United States to get its coronavirus outbreak under control and boost the recovery, but there's little sign of that.
The United States' fumbling response to the pandemic and its dithering over a new aid package is casting doubt on its economic prospects and making it one of the chief risks to a global rebound.
Many U.S. states prematurely declared victory over the virus and began to reopen their economies, leading to a resurgence in COVID-19 cases.
While it does not dominate global commerce like it did 20 years ago, America is still by far the biggest economy - accounting for 22% of total economic output, versus 14% for No. 2 China, according to the World Bank.
That makes its handling of the pandemic and its economy crucial for companies like Officina del Poggio, a producer of luxury handbags in Bologna, Italy, that sells 60% its vintage motorcycle-inspired satchels to U.S. customers.
The United States is unlikely to pull the world economy out of its rut as it did in past downturns such as after the Asian financial crisis of the late 1990s.
The American economy shrank at an annual pace of 32.9% from April through June, by far the worst quarter on record.
The numbers are expected to bounce back strongly in the second half but to leave the U.S. economy well short of where it stood at the beginning of 2020.
U.S. stock markets are nevertheless near record highs, but analysts attribute that largely to the Federal Reserve's commitment to keep interest rates low.
The European Union, which has reduced the number of contagions more effectively than the U.S., saw its economy shrink at a similar pace but is forecast to grow more quickly next year.
The United States' diminished ability to drive global growth isn't just related to its coronavirus response.
China's economy has consistently grown faster than America's and has steadily narrowed the gap between them.
He said that a weak U.S. economic rebound is the greatest risk to the eurozone and world economy, along with a second wave of coronavirus contagions.
Chinese exporters already were looking for alternatives to the U.S. market after President Donald Trump raised tariffs on their goods in 2018.
The general manager of Yiwu Sinohood Bags Factory, which makes canvas tote bags, said it usually exports 40% to the United States, but sales in America have dropped to zero.