Living the dream – how America has started to rewrite history
Make no mistake politics plays a major role in influencing the GDP of any nation. However, in the case of The United States of America, when it comes to the extensive period of economic growth it has enjoyed, there is much more than meets the eye.
Amidst recent reports of looming trade wars and increased tariffs set to threaten not just China but global economies; the U.S.A seems to be steadfastly bucking past trends in its typical business cycles.
Unemployment is at the lowest it has been in the last 50 years; interest rates have remained uncharacteristically low for a longer period, and the U.S stock market has already risen by 19% so far this year.
All of the above form worthy components of a very rosy picture, bewildering some experts as to why or how America continues to keep recession at bay, and is a topic of much debate.
Changing with the times
Historically America can attribute much of its growth to manufacturing, new inventions, vast natural resources, a growing population, efficient transport infrastructure, advancements in communication and burgeoning investment banking systems that dominate global markets to this day.
As with many countries across the globe, particularly in the west, The Fourth Industrial Revolution has brought with it significant changes in U.S business models. Where manufacturing now accounts for just 11% of GDP, and services claim the lions share at 70%. ‘Cheap China’ (the ability to manufacture goods in China at significantly lower costs due to a bigger workforce) and global value chains are just two examples of business models that could explain Americas’ good fortune. However, in order to understand the bigger picture, these combined with several other legislative and economic measures provide a unique set of circumstances that should be examined as a whole.
As new technology continues to disrupt and influence more traditional markets, foreign investment in the U.S remains buoyant. And whilst international businesses form just 1.3% of companies based in the U.S.A; in 2018, foreign direct investment accounted for a staggering 4 trillion U.S dollars (£3,194,400,000,00). Roughly 25% of total global stocks.
Keeping up with the Jones’
The UK has long since enjoyed a special relationship with the U.S. Last year some 36,000 UK businesses exported goods and services to the tune of £46 billion. With the Federal Reserve forecasting growth of around 2.3% in 2019, long may it continue.
Undoubtedly, innovation, flexibility and willingness to adapt to change, are all driving forces in a vibrant economy. However, trends are fickle by nature, and todays golden chalice can become tomorrows’ hot potato almost overnight.
It takes real industry insight, agility and astute financial management/planning in order to stay relevant. That’s where can help.
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