In my view, the U.S. economy is the "engine that must" lead the rest of the world's economies out of this terrible mess.
But for the U.S. economy to achieve "escape velocity" and emerge from its current "stall speed" status, the private sector must lead the way. Escape velocity means ~3% or greater inflation adjusted growth, and that's not in the cards today.
Here's some related morning news.
Oil prices are on the decline again this morning as economies slow, thus leading to less consumption.
Oil futures see sharp declines after China data provides this update:
"Crude-oil futures fell sharply in electronic trading Thursday, extending the heavy losses of the previous session, after weak Chinese data raised further concerns about demand trends.
Dashed hopes of more aggressive monetary-policy action from the U.S. Federal Reserve on Wednesday also played a role in the decline for oil, analysts said. . . .
On Wednesday, oil dropped $2.23, or 2.7%, to end at $81.90 a barrel on the New York Mercantile Exchange, the lowest close for a front-month contract since Oct. 5, as investors fretted about supply data. Read more about Wednesday's oil move.
A report from the Energy Information Administration showed crude supplies rose by 2.9 million barrels in the week ended June 15. That contrasted with expectations of a decline of 600,000 barrels for the week, according to analysts polled by Platts."
But there's more bad if unsurprising news out today on the economic front. Euro Zone Business Activity Contracts Again says this:
"Business activity in the euro zone contracted for the fifth straight month in June, increasing the likelihood that the European Central Bank will cut its key interest rate in an effort to stimulate growth when its governing council meets in two weeks.
The preliminary composite purchasing managers' index for the currency area was unchanged at 46.0, the lowest level since June 2009. A reading below 50 means activity is contracting month to month.
Markit Economics, which compiles the surveys of purchasing managers at manufacturers and service providers, said the PMIs for the three months of the second quarter point to "the steepest downturn for three years."
"The downturn is gathering pace and spreading across the region, with Germany on course for a marginal fall in GDP (gross domestic product) in the second quarter, although far steeper declines are likely elsewhere," said Chris Williamson, chief economist at Markit. . . .
The survey suggests that activity is unlikely to pick up soon. New orders fell for the 11th straight month, and manufacturers cut purchases of raw materials and other inputs at the fastest rate since June 2009, citing the need to lower stocks in anticipation of production levels declining in the months to come. . . .
"German manufacturers were at the forefront of the downturn, as a worsening global economic backdrop and the continuing euro crisis weighed heavily on export demand," said Tim Moore, an economist at Markit Economics, which compiles the surveys."
The U.S. will lead the way out of this mess, but we're not acting very much like leaders right now.
We'll get to all this later today, but I wanted to share the morning news about oil prices, Chinese and German growth prospects and so forth.
Later today we'll get to the private vs. public sector issues for America and what they mean for all of us with respect to worldwide economic growth and prosperity.
Stay tuned and enjoy the day. In the end, we'll win, but I do wish we'd start doing what needs to be done.
So does, or at least should, the rest of the world, for that matter.