If we required a reminder that the United States is more fully integrated into global economic and financial markets than ever, we received it by way of the latest turmoil in U.S. equity markets. By many measures, valuations had become stretched, so in some respects the markets were looking for a reason to correct. However, there is no doubt that the recent market anxiety was at least “assembled” in China, with components from the global supply chain, before being imported into the U.S.
Nevertheless, recent data on housing, consumer confidence, auto sales, capital goods orders and PMIs all point to underlying strength in the U.S. economy. Even the second quarter was stronger than previously thought with GDP growth being revised up to an annual rate of 3.7 percent. More impressively, final sales to domestic private purchasers rose at an annual rate of 3.3 percent, an upward revision from the first estimate of 2.5 percent.
So, where does this leave us? On balance, the U.S. economy is expanding at a 2.5 percent to 3.0 percent pace, but downside risks to the outlook have risen due to the correction in U.S. equities and financial sector stress. Equity market anxieties will knock just 0.2 to 0.3 percentage point off of U.S. GDP growth over the next four quarters.
The Milken Institute's annual "Best-Performing Cities" index shows that technology and shale energy were the biggest factors behind America's booming cities — especially technology. Tech titan San Francisco claimed the top spot, up two ranks from last year. Last year's No. 1, Austin, Texas, dropped a slot. The rest of the top five boast thriving tech sectors as well: Provo, Utah (third, down from second last year); San Jose, Calif. (unchanged at fourth) and Raleigh, N.C. (fifth, up from 13th place).
This is the Milken Institute’s first-ever ranking of the economic performance of Asia’s major cities, revealing that in creating jobs and vibrant urban growth, the Chinese dragon still roars. Of Asia’s top ten cities, six are in the People’s Republic. Top of the pack: Shenzhen, the birthplace of modern Chinese economic reform.
The Yen Sets, but Does the Sun Rise? Abenomics and the Future of Japan
The year 2012 was a period of tremendous change for Japan. Having dealt with years of economic stagnation after the collapse of asset bubbles, Prime Minister Shinzo Abe's platform to restore national growth has been ambitious. But will it continue to show signs of success?
Often described as the "three-arrow policy," Abenomics -- the term coined to represent Abe’s economic policies -- has included aggressive steps designed to break the grip of deflation. The first arrow comprises monetary policy and inflation targeting. The second arrow aims to further large-scale fiscal stimuli, and the third arrow is structural reforms in many dimensions.
This report analyzes the impact of Abenomics and identifies areas, especially within the third arrow, for opportunities for improvement. The report also compares Abenomics to a number of fiscal policies and efforts in other parts of the world that have been attempted to boost economic development.
A Matter of Degrees: The Effect of Educational Attainment on Regional Economic Prosperity
Ross DeVol, I-Ling Shen, Armen Bedroussian and Nan Zhang
When it comes to education, a rising tide really does lift all boats. That's one of the conclusions of this sweeping research report.
Ross DeVol, chief research officer and one of the report authors, explains: "Our research makes a compelling case that for America's communities, the returns to investment from higher education have never been greater. We pinpoint the value regional economies gain by adding better-educated workers and show that, as those around you obtain more education, their wages rise aEUR" and yours do, too."