How is the US Economy Doing Compared to Other Parts of the World?

March 7, 2013
/ Invest & Retire
/ By Jacob A Irwin

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The following is a guest post. Enjoy!

The final quarter of 2012 painted a bleak picture for the US economy. But that was then, and the first quarter of 2013 is offering US citizens a different, more promising one, according to a recent report from the Fed.

But, the question remains – how does this compare to how other parts of the world are doing?

As a comparison, on the other side of the world in the United Arab Emirates (UAE), Dubai (another economic hotspot due to oil influence) is also seeing good things happen in its economy. After the burst in the housing bubble, its financial and housing markets have gradually started to regroup and enjoy the refreshing taste of recovery.

Let’s look at some recent events in more detail to see how the US is doing compared to other parts of the globe:

Full house – Housing Market Status

Encouraged by lower interest rates, US homebuyers are house hunting again. According to US Department of Commerce figures, sales of new homes increased by 15.6% in 2012, the largest percentage they’ve seen in almost 20 years. But fasten your seatbelts some more: they’re expected to increase even more during 2013.

House prices had also risen by 6% by the end of 2012. All of this activity on the US housing market reflects greater consumer confidence (as well as buying more houses, Americans are buying more cars), which is gradually returning and allowing the housing market to start feeling itself again.

Dubai, in the UAE, is likewise enjoying a housing market recovery. Prices are returning to those of 2008, the year the bubble burst after years of property speculation. As prices rise, we’re more like to see more people apply for home loans in the UAE.

Faith restored in the Stock Markets

Now is a good time to be a borrower in the US. The Fed is sticking to its policy of investing in mortgage and Treasury bonds, keeping the cost of borrowing down for longer.

Ten out of twelve districts reported moderate growth to the Fed. However, banking isn’t the only sector recovering from the economic storm. The stock markets are fighting back too. The Dow Jones has more than just recovered all of its losses since the Great Recession: it’s smashed its closing record of 14,235.77, up 125.95 points on its record of 14,164.53, set in October 2007. Now all eyes have turned to the Standard and Poor’s Index, which is just 24 points away from its 2007 record close at 1,565.15.

At the same time, investor confidence has also grown in Dubai. Stocks on the Dubai exchange hit a record high recently, with gains of 16%. There’s particular confidence in property stocks.

On the job

Job markets bring us good news as well. Factories and service companies have grown at the fastest they have done in at least a year. US businesses reported adding 215,000 jobs in January 2013 and 198,000 jobs in February, helping unemployment to drop slightly from 7.9% in January to 7.8% in February.

And as the Dubai economy continues its recovery, companies there are expected to hire more people, both in Dubai and other parts of the UAE. However, once bitten, twice shy, and they’re likely to do this with more caution.

Conclusions

The statistics show that both economies are beginning to recover from the fallout of the financial crisis, particularly the US. More people are finding jobs and consumer and investor confidence is growing back. This is all amid concern about US government spending cuts and higher income taxes, but so far those fears have proved unfounded. Economic good times really do lie ahead.

How about you all? What’s your feeling on the strength of the US and global economy at the present time and where it’s heading in the near future?

Share your experiences by commenting below!

Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

Very interesting guest post here! Thanks for sharing!
Since I mostly watch Netflix movies, I don’t often watch news reports on the US/global economy, so it was interesting for me to hear some of the recent statistics about the housing market and unemployment rates.
Regarding the comparison between the US and the UAE specifically and how both economies seem to be going upwards right now, it really highlights how globalized the US economy has become. In fact, it’s hard to find a company that does not have some sort of monetary foothold that it depends on another part of the world for, whether it’s manufacturing or customer base.

***Photo courtesy of http://upload.wikimedia.org/wikipedia/commons/d/d7/Philippine-stock-market-board.jpg

About the Author Jacob A Irwin

Hi folks! My name is Jacob. I am the owner and operator of My Personal Finance Journey. I started this blog in January of 2010 and have enjoyed the journey ever since. Since finishing up graduate school in Virginia in 2014, I have been working in biopharmaceutical development in Colorado. You can read more about me and this site here. Please contact me if you have any questions!

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