WCA March 2014

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56 Wire & Cable ASIA – March/April 2014
From the Americas
BigStockPhoto.com Photographer: Aispl
The US economy
On the rebound from recession, a ‘new
America’ is seen as unlikely to resume its
role as global consumer of last resort
“When the US grew at a healthy pace, its citizens were
buyers, fuelling demand for the goods China and other
nations produced. They kept the world economy humming.
It may not work that way anymore.”
In his preview of the January issue of Bloomberg Markets
magazine, Simon Kennedy reported that strengthening in
the US economy and weakening in China, India, Brazil and
elsewhere reverses the trend that had shaped global growth
since 2008.
In the view of economists surveyed by Bloomberg News, a
rebounding US is giving less support to global growth than
in the past. Home-grown demand and production are more
important drivers of the world’s biggest economy than they
were a decade ago.
Oil and gas exploration and production are adding to
growth, and the country is spending less on imported
energy. Mr Kennedy also noted that the cheaper fuel
and raw materials are boosting manufacturing as well,
making the US more of a competitor to emerging-market
nations and less reliable a consumer of their goods.
(“America’s Role as Consumer of Last Resort Goes
Missing,” 1 st December).
This economic outlook has support from informed sources.
“Global growth is slowly becoming more of a zero-sum
game,” Manoj Pradhan, emerging-markets economist
at Morgan Stanley in London and a former International
Monetary Fund official, told Bloomberg. “US growth is
not reverting to the pre-crisis model, which created lift for
everyone else.”
Gustavo Reis, senior international economist at Bank of
America Merrill Lynch, pointed out that, at one time, a
pickup of one percentage point in US economic growth
typically boosted expansion elsewhere by 0.4 percentage
point. Now, he calculates, the benefit to other countries
is moving toward 0.3 percentage point – for an addition
of $48 billion to the rest of the world economy instead of
$64 billion.
A World War II-era term provided Mr Reis with an illustration
of what this will mean: “A stronger US economy is an
important part of our expectation for healthier global
growth, but the oomph to the rest of the world will probably
be somewhat less than in the recent past.”
❖ Emerging markets, which fared better than the US and
Europe during the global recession, will feel the effects.
According to the median forecast of the economists
surveyed by Bloomberg News, from an estimated
1.7 per cent growth in 2013 the US is likely to grow
2.6 per cent in 2014 and three per cent in 2015. But if
growth is not ignited elsewhere, investors will probably
favour US and other developed-nation stocks over
emerging-markets currencies and assets.
That is what happened in 2013, observed Mr Kennedy.
At the end of November the South African Rand had
lost 17 per cent year-to-date against the dollar, while the
Brazilian Real had dropped 11 per cent.
The Standard & Poor’s 500 Index of large US companies
returned 29 per cent through 27th November compared
with a loss of 2.2 per cent for the MSCI Emerging
Markets Index of 818 developing-world stocks.
The ‘drone economy’
Not everyone is waiting for the Federal
Aviation Administration to draw up
regulations for unmanned flying devices
“I walk down the street and see drone dollars everywhere.
The potential is huge, and thousands of people are already
flying them around the US making money.”
The speaker was Patrick Egan, a drone consultant who
heads the Silicon Valley chapter of the Association for
Unmanned Vehicle Systems International (AUVSI), a
lobbying group for the industry. In an interview with the
news daily USA Today , Mr Egan described a fast-growing
“drone economy”, already booming abroad, that is
providing American entrepreneurs with new ways of making
a living. (“Underground Drone Economy Takes Flight,”
2nd December).
The AUVSI estimates that, when the Federal Aviation
Administration (FAA) does issue drone regulations,
integrating the devices into US airspace could boost the
American economy by at least $13.6 billion in the first three
years and by more than $82 billion between 2015 and 2025.
It could also create more than 70,000 new jobs, including
34,000 manufacturing positions, in the first three years.
In ten years, the group forecast, 100,000 jobs will have
been added.
The FAA plans to draw up regulations for the futuristic
unmanned devices by 2015, in the meantime limiting their
commercial use. But, as noted by Alistair Barr and Elizabeth
Weise of USA Today, drone entrepreneurs are an impatient
lot. “There are many people out there making extraordinary
amounts of money,” Gene Robinson, who uses drones to
help authorities with search and rescue missions, told the
newspaper. “You can even get liability insurance to operate
now.”
Amazon.com CEO Jeff Bezos drew attention to drones
when, on a TV talk show on 1st December, he talked about
his plans to use them to deliver packages. But, given their
ability to shoot aerial photos and video steadily, and collect
other data cheaply, drones are already seeing service in
sectors including construction, movie making, sports,
mining, and oil and gas production.
Mr Barr and Ms Weise noted that business owners may
legally operate their own drones for their own benefit. Many
US operators of drones, which can cost under $500, are
either hobbyists or providers of drone services free or for
donations.