Despite weak economic recovery and a very peculiar political configuration that ensures that fiscal stimuli cannot really be applied to any extent any more, the US economy continues to be the major global economy.
The dollar continues to be the preferred reserve asset in the absence of viable alternatives, as evidenced by the recent 'flight to safety' to dollar assets in the face of global uncertainty.
But even so, it is clear that the US cannot and will not be the engine of global growth in the immediate future, even if the combination of external forces and internal pressures allow for some domestic recovery. The entire burden of ensuring stable recovery has been put on monetary policy through the 'quantitative easing' measures (which really amount to no more than increasing money supply with the banks), whereas without more aggressive employment-oriented fiscal expansion and credit flows directed to small businesses, a genuine recovery is unlikely.
The housing market in the US is still in the doldrums, the deleveraging of the household sector continues, and the US - like all other segments of the world economy - seeks to base its own growth on more exports!
Image: Local community leaders join Occupy Wall Street demonstrators outside a foreclosed property in the East New York section of Brooklyn.