World Bank President Robert Zoellick told reporters on Tuesday that the global economy is likely to avert a double-dip recession.
Zoellick said that he saw the U.S. “limping” along and unemployment remaining a problem but argued that the U.S. will likely avoid another recession. He told reporters in Singapore, “I don’t believe that the United States or the world will go into a double-dip but there’s high degrees of uncertainty.”
The comments from the leader come on the heels of comments made at a Beijing conference last week in which Zoellick warned that the world was entering into a new “danger zone” this coming autumn.
Zoellick added that the threats of rising food prices, volatility in commodity markets, and debt crises in the developed world will be putting the most vulnerable people at “risk” and suggested that China strive to continue to serve as an engine of growth for the global economy.
Zoellick added, “It’s important that policymakers make decisions not only on the short-term challenges, but also the medium and long-term structural drivers of growth, innovation, and opportunity."
With the U.S. economy staggering, analysts across the gamete are arguing that several factors are coming into play with the economic downturn and offer their own policy prescriptions to handle the lack of growth and uncertainty that have riveted the United States.
Robert Reich of the University of California at Berkeley argues that the growing inequality in the United States is a push factor that has led the U.S. into economic stagnation. Reich argues, “The economy won’t really bounce back until America’s surge toward inequality is reversed.”
Reich finds that without a nascent middle class able to spend without going into debt, the economy will not be able to stabilize.
Others believe it is the lack of self-sufficiency that is creating the economic turmoil evidenced in the United States. Thomas Heffner, the publisher and founder of the website Economy in Crisis, argues, “The U.S simply does not produce what it needs to sustain itself.”
Heffner adds that the wealth achieved in the United States in the 20th century has been increasingly eroded within the last 30 years due to sustained trade deficits that have eroded competitive domestic industry.
Heffner's website, EconomyInCrisis.org, has even created a song about America’s economic woes entitled “Wake Up America.” The song includes lines such as, “We’re forced to live on imports to satisfy our needs,“ and “We’ve lost whole industries, electronics, automobiles, and steel are just a few of these.”
The song concludes with a policy suggestion saying, “We have to subsidize our research and development and reindustrialize.”