Global Influence Of Us Economy

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Article on the influence of the US economy on the world economy

Article on the influence of the US economy on the world economy

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  • 1. The U.S. and the global economy The current economic woes have affected economies around the world. When U.S. stocks tumbled following the collapse of investment giant Lehman Brothers and troubles at insurance monolith AIG in 2008, the devastation on Wall Street reverberated around the globe. Within hours foreign markets began a downward spiral, and it’s been a roller coaster ride ever since. Globally connected There are a number of reasons why Wall Street has a domino effect beyond our borders. One contributing factor is that over the years, as global trading and foreign investments have increased, world economies have grown increasingly interdependent. U.S. companies are heavily invested in foreign markets, and vice versa, making us all vulnerable to international events that affect stock values, which can include everything from political upheavals to natural disasters, poor investment decisions, fraud and more. Overseas operations The United States has also become less financially insular as more U.S. companies have expanded their overseas operations. We’ve all read the media reports about manufacturing, customer service and technical support jobs flowing over seas, further globalizing businesses. Due to advances in technology and financial infrastructures, businesses are able to move more quickly. Reliance on electronic financial transactions, which enable lightning- fast debits and credits, have removed buffers that once helped delay and sometimes temper the reaction of markets when the world traded at a snail’s pace. Improvement in the transportation of goods has also helped accelerate the interdependence of global economies. Government efforts The U.S. government is influential as well. With influence comes control, and the U.S. has prided itself on being an economic superpower for the last century. According to the Federal Reserve, the U.S. dollar is the most preferred transaction currency around the globe, accounting for half of the world’s foreign exchange reserves, and the U.S. Treasury would certainly like to keep it that way. The Federal Reserve regularly conducts
  • 2. financial business with foreign countries to intentionally boost the value of the dollar. If the fragility of the U.S. economy gives you jitters, your concerns are not unfounded. Our business community needs to work harder than ever to ensure innovation and free enterprise prevail, create jobs and bolster demand for U.S. goods and services. For the U.S. to continue to prosper, we need to excel in every way, including productivity, foreign relations, fiscal policies, health care, education and more. Despite recent events, history shows the cyclical nature of the stock market and points to a strong likelihood we will weather this financial storm and come out on the other side stronger. As fear subsides, confidence should return and help American businesses get back on track toward rebuilding the U.S. economy and thereby improving the global economy. The strength of the U.S. economy depends on the willingness of consumers to spend and invest in American businesses. Talk to your financial advisor to discuss your financial goals and your risk tolerance before you invest. You can diversify your portfolio by choosing from an array of U.S. and foreign investments that match your risk tolerance and time horizon that are balanced to help you avoid excessive exposure to one class of investments. Daniel J. Lensing, CPRC Financial Advisor Business Financial Advisor Ameriprise Finanical Services, inc. 14755 No. Outer 40, Suite 500 Chesterfield, MO 63017 Tel: 636-534-2097 This column is for informational purposes only. The information may not be suitable for every situation and should not be relied on without the advice of your tax, legal and/or financial advisors. Neither Ameriprise Financial nor its financial advisors provide tax or
  • 3. legal advice. Consult with qualified tax and legal advisors about your tax and legal situation. This column was prepared by Ameriprise Financial. Financial planning services and investments offered through Ameriprise Financial Services, Inc., Member FINRA & SIPC. © 2009 Ameriprise Financial, Inc. All rights reserved. File # 82071 3/09