In 2008 Americans reduced their debt outstanding for the first time since the World War II, according to the Federal Reserve, says the Wall Street Journal. What could this mean for the future of the global economy?
Well, first of all, it is a positive trend that will potentially be able to eliminate current disproportions in the global economy, but might also be bad news. If the idea to save lingers in the American’s minds the process of the global economic recovery may take more time as the major component of GDP, consumer demand, will not grow as fast. Countries like China will be severely affected by this as they are heavily dependent on the demand for consumer goods in the U.S.
Situation in the emerging economies would be different as U.S. investors have additional funds to invest into the high return BRIC markets. Ultimately, we might see Americans returning to their old spending habit, but it will likely to take a few years.
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