The U.S. consumer is coming to the rescue of the global economy. Back in 2009, companies turned to China to prop up a shaken world.
Now, with decades-high inflation in many countries, they’re looking for the United States to do the heavy lifting. Covid-19 lockdowns and war are taking their toll, but spending has been resilient.
China’s role in alleviating the impact of the global financial crisis has been widely overestimated. Its 4 trillion yuan ($586 billion in current dollars) stimulus package compensated for plunging foreign demand by plowing money into infrastructure.
The policy increased purchases of iron ore and other commodities from Australia and elsewhere, put a floor under Chinese revenue streams at businesses such as Starbucks (SBUX.O) and Volkswagen (VOWG_p. DE), (VOWG.DE), and pushed quarterly GDP growth to a blistering 11.9% by the end of 2009. Since most of the non-commodity demand was inside China’s borders, however, its effect on overseas job creation was in limit.