Although we are not quite ready to use the song-inspired phrase “let the good times roll” when discussing national and global economies, with the ongoing strengthening of the recovery and predictions calling for significant growth in the days ahead, such an expression may become apropos in the not too distant future.
It is probably still a bit premature to declare an end to the recession, but after four consecutive quarters of declines, our economy is on the move again, albeit at a sluggish pace.
Jobs losses, though ongoing, are declining in severity, and while foreclosures remain prevalent, the rate of both existing and new homes sales has quickened significantly. In most directions you look, there is at least a bit of sunshine overhead.
Perhaps the 19th century British poet, Percy Shelley summed the situation up in his famous Ode to the Western Wind, undisputedly one of his greatest. In it, he focused on hope for the future and claimed “if winter comes, can spring be far behind.” If what we have been experiencing the past couple of years can be described as the winter of our economy, then spring is certainly now in the air.
Last week, the International Monetary Fund proclaimed that global growth for this year will likely be more than 4%, a far cry from the negative expansion of last year.
However, just as springtime is often fraught with unpredictable weather patterns, the road to prosperity in the future is still beset with uncertainties. And growth will not be uniform across the world. The revival of economic activity over the coming months will vary and move forward dissimilarly in various parts of the world.
For example, the tempo of economic escalation will likely be faster in China and other emerging countries than in advanced and well established economies. Even among the more sophisticated economies, however, the pace is expected to vary, i.e. the rate of growth of the United States and Canadian economies will likely be faster than the pace in Europe or Japan.
Risks for the future have receded, but there is still substantial work to be done to regain full economic health across the globe. In order for there to be strong, balanced, and sustained economic health, better fiscal policies must be reevaluated, reestablished, and reinforced so that problems such as that which the Greece economy continues to endure, will not be exported to other nations.
Reducing the ratio of gross debt to gross domestic product will greatly diminish vulnerabilities and is clearly a step in the right direction. Additionally, regulations that ensure the safety of financial systems must be balanced with the risks necessary to enhance efficiency and promote innovation. Inappropriate risks, however, undertaken either by major facets of a nation’s economy or by the national leadership have the potential to undermine financial stability and create crises that might provoke new economic challenges and difficulties.
Most economies around the world are doing better now than they were at the end of last year. As proper procedures are put in place and confidence in the future becomes more optimistic, consumer and business spending will likely increase. In light of these circumstances, the outlook for continuing recovery is quite encouraging.