The U.S stock markets have been oscillating between mayhem and malaise in 2016. In early days the volatility was blamed on China and its erratic stock markets. Volatility remains elevated, but malaise has set in as data last week confirmed fears of a slowdown in the U.S. economy. In the final quarter of 2015, the economy decelerated to a mere 0.7% annual growth rate, a significant drop from the pace witnessed earlier in the year. The data revealed that exports slowed and that firms reduced orders to build inventories. With exports falling, it’s easy to blame the problem on foreigners; everyone knows that China and Europe’s economies are not doing so hot. However, looking a bit deeper, it appears more likely that the problem lies in the strengthening US dollar; America’s successful emergence from the Great Recession is to blame.
|