The great thrift shift: a survey of the world economy

Citation

(2006), "The great thrift shift: a survey of the world economy", Strategic Direction, Vol. 22 No. 3. https://doi.org/10.1108/sd.2006.05622cad.003

The great thrift shift: a survey of the world economy

The great thrift shift: a survey of the world economy

BeddoesA.M. The Economist (UK), 24-30 September 2005, Vol, 376 No, 8445, Start Page: 3, No. of pages: 19

Purpose – To provide a survey examining whether the shifts that have caused the ”savings glut” are temporary or long lasting. Design/methodology/approach – Reports how the ”savings glut” argument, advanced by some economists, has been welcomed by US politicians keen to shift the focus away from US monetary and fiscal policies. Takes a critical look at the ”savings glut” theory and drawing on classical and Keynesian economic theory, reports, statistical information and quotes from economic experts, proposes that there has been a shift in savings and investment on the part of consumers, companies and countries. Identifies how there is now a massive surplus of savings being accumulated by Asia, particularly China, and by the oil-exporting countries; highlights how it is being matched by high consumer spending in the USA. Discusses some of the factors that are inhibiting or encouraging countries to save and invest; points to the structural, global decline in investment and offers some possible explanations. Features how in both Japan and China consumptions patterns have failed to keep up the huge rise in incomes; looks at what is encouraging thrift by consumers in these countries. Investigates why the USA appears to be a more favourable investment opportunity than Europe and looks at whether there are any incentives for the USA to stop obtaining cheap money abroad; considers that the growing savings-investment imbalance will eventually weaken the US economy; identifies some of the danger spots, suggests that the USA’s role as the global consumer of the last restore may become unsustainable before the rest of the world works of its savings surplus; makes some suggestions as to how the global imbalance could be improved. Originality/value – Provides an informative overview of the world economic situation and the part being played by the USA.

Style: ViewpointISSN: 0013-0613Reference: 34AW681

Keywords: China, Europe, Investments, Japan, United States of America, World economy