‘The United States of America, right now, has the strongest, most durable economy in the world.” So said Barack Obama last week, in his final State of the Union address. With elections this coming November, this two-term president is now in his last year in office. So what is Obama’s economic legacy? And just how strong is the US economy today?
Obama entered the White House in January 2009, in the midst of America’s worst financial crisis in decades. As his presidency starts to draw to a close, the economic storm clouds are gathering once more. The US stock market, like its British, European and Chinese counterparts, has endured some stomach-churning drops so far this year. The latest was on Friday, when the Dow Jones Industrial Average, having rallied the day before, plunged 300 points soon after opening, on a slew of bad economic data.
So, the Federal Reserve finally did it. I half-suspected Janet Yellen would find yet another excuse not to raise interest rates last week. But the Chair of the world’s most important central bank made her move, with the Fed’s Open Market Committee coming to a unanimous decision.
For the first time in almost a decade, US policymakers put up the “Fed Funds rate”. Having been steadily cut from late 2007, as the ghastly sub-prime crisis loomed into view, then dramatically slashed to historic lows after the Lehman Brothers collapse a year later, America’s benchmark price of money has sat at 0-0.25pc for an incredible seven years.
The Japanese economy is supposed to be recovering. Just a couple of weeks ago, official data indicated an expansion of 0.9pc during the first three months of this year. That placed the third-largest economy on earth among the developed world’s top-performers.
Here in the UK, our GDP increased by just 0.3pc during the first quarter of 2013, while the United States registered 0.6pc growth. The Eurozone, meanwhile, remained stuck in reverse gear, its economy contracting 0.2pc over the same period.