HOW CAN THE US ENSURE LONG TERM HEALTH & ECONOMIC GROWTH? Dr Sheard explained that short- term shocks, such as geopolitical events, especially disruptions in oil and gas supply, can create inflation. For example, oil price spikes directly affect energy costs and
indirectly raise broader
consumer prices. However, the Federal Reserve
plays a key role here by mitigating these shocks and adjusting monetary policy. In the short term, shocks cannot be fully offset, but he explained that the role of the Federal Reserve is to prevent inflation from becoming embedded over the medium-to-long term. In his optimistic assessment
of the US potential for future growth, Dr Sheard highlighted a number of unique elements in the economy which are strongly tipped towards success:
• Innovation & tech ecosystem: Silicon Valley is a globally unique resource that attracts talent and innovation and drives growth
• Financial markets: Large and sophisticated capital markets (Wall Street, hedge funds, private equity) underlie the dollar’s global reserve currency status and continue to play a central role in global economic success
• Rule of law & institutional stability:
Despite what
politicians may wish to do or say, the separation of powers within
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government, and built in checks- and-balances in the US political and legal systems provide long- term economic predictability and economic security
• Labour flexibility & migration: The US benefits from inflows of highly skilled talent globally, which supports productivity and entrepreneurship.
Although
short-term restrictions may make talent movement more difficult, over the long term Dr Sheard believes that the US will still continue to attract people coming to work there and experience the American Dream and the opportunities that it presents.
In summary, he argued that the US economy continues to have strong structural advantages, including talent, capital, and innovation. While
political decisions on
immigration, public services, or fiscal management could slow growth or reduce efficiency, the US economic system will remain robust. Dr Sheard explained that while short-term shocks like the strikes on Iran may cause temporary inflation, Federal Reserve policy and structural factors will limit any long-term impact on the US economy. Over the long term it will continue to grow strongly and remain one of the most important economies on a global scale.
“ THIS IS NOT A COMMAND & CONTROL ECONOMY. THIS IS THE MOST CAPITALIST MARKET ORIENTATED ECONOMY OF THE GLOBE.”
DR PAUL SHEARD, AUSTRALIAN AMERICAN ECONOMIST, POLICY COMMENTATOR & AUTHOR
GLOBAL LEADERSHIP
US E CONOMY
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