Thursday, October 11, 2007

Current US Economy - an analysis

US economy is not doing that well. US is struggling to cope with mortgage related issues like high interest rates, falling real estate prices which indirectly resulting in pre-closure or credit related issues. Added to that, increasing energy prices, not so comfortable job market resulted in slowing down of economy and high inflation.

What lies ahead for future?

1. Consumer behaviour - I do not think consumers would stop spending. They can either keep on borrowing until they go completely broke or manage within their limits. American consumers lived out of credit in the past and it is difficult to change their behaviour. They can bit slow down but cannot be halted. I think, the credit card outstanding is some where hovering around 800billion dollars or so.

2. USA Economy - Yes, it has slowed down but it still remains the largest export market in international trade.

3. USA viewed in geo-political arena - USA is most cursed and most loved at the same time. Politically, US is not loved but USA "culture" is loved by most people. (Let us not get into right or wrong here). Junk foods, consumer brands, jobs, music, movies to name few.

4. Immigration laws of USA - USA immigration laws are most friendly when compared to many developed countries, US still remains in demand.

5. USA in Arms trade, Space - US is in complete control of arms trade for most of the world and they continue to thrive on weak and non-united middle east, Asia, erst while Russia, Africa. USA continue to flourish in space technology.

6. Housing Market - considering all this, i think, signs of economic weakness could be short-lived as immigrants and foreign nationals could buy properties in USA and maintain or even improve demand and supply over the next 10 years.

7. USA would continue to remain the vital force for another 15-25 years. And the only situation which can bring the economic downfall of USA is united Asia (which includes China, Korea), Middle East, Russia and to some extent Euro Zone. This would take a real long term to materialise.

8. Hence, to summarise, in my understanding, slowdown in USA could be short-lived and USA Economy (and not stock market alone) would come back with vengeance if one would view of 2-7 years.

No comments:

Post a Comment