During the last three years, the world has witnessed great changes. In 2007, the United States was affected by a high-risk crisis that exhausted all available liquidity in the markets. The world reacted and the demand for oil increased dramatically, leading to crude trading at $135.00 on the stock market. Europe began to suffer after European banks and investment firms went bankrupt en masse. American voters took their frustration to the polls and voted in a government controlled and administered by the Democratic Party.
Ironically, the change failed to produce sustainable gains. Yes, the “Great Recession” is officially over, but the facts remain the same. Unemployment in the US is currently 9.3%, up from 5% in January 2007 (US Bureau of Labor Statistics 2010). The federal government is divided as voters voted the Republican Party to control the House of Representatives. Stock markets are in a constant frenzy over debt concerns as members of the European Union request assistance (The Associated Press and Reuters 2010). Even the great Asian economic powers are worried. China is currently facing its highest level of inflation since the start of the new century (MediaCorp Press Ltd. 2010).
What about real estate, has the industry recovered? US real estate values have generally stabilized, with the exception of high-end properties. A different story is traced internationally. The United Arab Emirates, Spain and Japan are suffering from real estate-related debt. Spain saw the rating of its national bonds downgraded several times in the last 12 months (Oakley and Mallet 2010).
Domestically, the Obama administration will be forced to work with a different government. Analysts are generally optimistic about corporate governance where the government is controlled by more than one party. They cite former US President Client and his achievements after 1994, when the Republican Party gained control of the US Congress. There is also the success of the French government, divided between different parties, in addressing concerns France’s budget compared to other European nations.
Finally, consumers should expect modest inflation as the world recovers from the latest economic bump. This inflation is the result of the redistribution of wealth and a greater restriction of public spending. The United States will continue to dominate the economic world as the world’s leading consumer, but the new middle class, coming from emerging economic powers, will compete with American consumers as they become more fully accustomed to the American way of life.
