After weak growth in the first quarter, is the US still the driving force of the global economy?

US economic growth stalled in the first three months of 2015 (Source: Getty)

Richard Batley, senior economist at Lombard Street Research, says Yes

US growth is going through a soft patch. This was initially the result of the negative impact of lower oil prices. A strong dollar then piled on the pressure. The port strike and a vicious winter also caused expansion to slow. Of all these negatives, only dollar strength poses a challenge to growth later in 2015.

But the dollar’s ascent was from a clearly undervalued level. Further strength would be concerning, but for now the dollar is not enough to push growth lower forever. Meanwhile, the positive consumer impact of lower oil prices will be increasingly felt as the year progresses. When the oil price plummeted in 1986, US growth suffered a similar hiccup ahead of the late-1980s consumer boom.

The real question is: does the global economy want the US consumer to be its “driving force”, with the associated accumulation of large global imbalances? That was the story of the noughties – and we all know how that one ended.

Anna Stupnytska, global economist at Fidelity Worldwide Investment, says No

This slowdown was driven by weather-related disruptions, energy sector adjustment to the lower oil price, and a strong dollar. The first two should fade, with consumers finally spending the income windfall from lower energy prices. But while growth is likely to return to trend later this year, the US is no longer the single driving force globally.

Tailwinds of lower energy prices and easier monetary policy are a powerful combination for boosting consumption and activity elsewhere. We already see clear signs of acceleration in the euro area, and Japan is set to gain momentum this year.

Given the latest attempts by the Chinese to step up easing, growth there is likely to stabilise, benefiting other emerging markets. While a stronger dollar will remain a drag for the US, the global recovery will continue broadening out, meaning growth leadership is likely to be more widely shared among major economies.

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