The global economic boom and America’s shrinking role in it

The global economy has been on a serious roll since 2004. According to IMF data, we’re in the midst of the biggest global boom since the 1970s. Of course, the ’70s weren’t so great in the U.S. and, while the ’00s have been better, they haven’t felt better for a lot of people. The charts below (created by Time.com’s Feilding Cage using data from the USDA’s Economic Research Service) help explain why. For most of the 1990s the U.S. share of global economic activity grew; since 1999 it’s been shrinking. It hasn’t been shrinking all that much: At a projected 30.49% in 2007, it’s still significantly higher than it was in the early 1990s. But the trend has shifted, and with it some portion of the national mood.

I happen to think that the richest country in the world ought to be okay with ceding some of its share of the global economy, as long as living standards aren’t actually declining here. It may even be, as I speculated in Fortune a few years ago, that a U.S. in full boom mode sucks some of the life out of the rest of the world economy. But yeah, it’s more fun being the engine of global economic growth than sitting somewhere toward the back of the train.

Spain’s Prime Minister Warns Country Is in Danger of Being Shut Out of Markets

MADRID — Spain‘s prime minister warned Wednesday that the country faced the danger of being locked out of international markets as investors continued to fret about the future of the euro and Greece’s place in the 17-country eurozone.

“Right now there is a serious risk that (investors) will not lend us money or they will do so at an astronomical rate,” Mariano Rajoy told Spanish lawmakers.

YMM

It makes me think, similar to a previous post, its a question of what aspects of the global economy are we especially losing our share/dominance. As our role in the world economy has evolved, so has our output in different industries, evolving from a reliance on agriculture goods – which is still significant, to manufactured goods, to sophisticated services. With each change in focus, energy, and production levels, the results are the same…protectionism. We’re still fighting with other countries to protect farming subsidies, we’re fighting to protect steel mills, and auto plants and those jobs leaving to countries with cheaper labor.

Rather than fight the inevitable shift, and I think even you would agree it is inevitable; we have to focus on where to invest our resources, to propel the newer, emerging industries that will fuel our continued growth. We may have a smaller share of the overall global economy, but if the majority of that is in agricultural and traditional manufactured goods…then let the world have it. We’ll be wealthier and more advanced if we own that share of the economy that’s the future engine that pulls the world along. Just a thought.
Justin Fox

Oh yeah, I said I’d work on that. Maybe I’ll chart manufacturing output by sector or something like that. Thanks for the reminder.
p_lukasiak

Does the phrase “Global economy” include not just international trade, but purely domestic trade as well? Or does it refer to just trade between countries?
Yadgyu, Harkeyville, TX

The only people losing in this economy are the mindless consumers who choose to buy depreciating goods and services instead of assets. The middle class always complain about money but they don’t do anything to help themselves.

Let the rest of the world get some money. What’s the big deal?
Justin Fox

Paul, the data are on all economic output, not just international trade.
http://www.oursheet.com Mario Ruiz

We sure like to be the largest. This is a men-type of thought. The strogest, the one with more women, the one with largest…

Although to have a large partticipation in the market is important, we need to realized that integration is including some Countries and markets to the same ammount of investment. Therefore is a natural effect to be in perspective little smaller. China Brazil, Russia, or India has been destinations for investment for a while. But now, Jon Auerbach, Managing Director of a NY broker firm propose: Nigeria, Bangladesh, Pakistan and Zambia. Is it nto logical to be a little less influential?
http://www.mrecord.com mrecord

thanks for all above information
http://www.electronic-medical-record-emr.com EMR

can any one provide information about outsourcing ratio
paul lukasiak

“Paul, the data are on all economic output, not just international trade.”

wow. then this whole issue becomes even sillier than I thought, because the US percentage of global economic output would be falling precipitously if the theories behind “free trade” were working.

There are 300,000,000 people in the US. There are 6.3 billion other people in the rest of the world (21 times more people than in the US). Maintaining a “stable” 30 percent of US to Global output means that if US output increases by $1000 per American (or $300,000,000,000) the rest of the world’s output increases by $700,000,000,000. Divide that by the 6.3 billion other people in the world, and it comes out to $111 per person.

Now this wouldn’t be quite so bad if the increase was distributed equally, but here in the US we know that a grossly disproportionate percentage of the benefits of what currently constitutes “economic growth” over the last six years has wound up in the pockets of the rather small percentage of people who were already at the top of the wealth pyramid in the US — and I suspect that unequal distribution of the benefits of economic growth are the rule, rather than the exception, in the rest of the world as well.
kuljit

recession is knocking at our door….