Some time in January, the ascending line of growth of the European Union’s economy crossed the descending line of U.S. recession, and, for the first time in post-World War ii history, the U.S. was pushed into second place on the world economy scales.
The difference between the federal economy of the EU and the national economy of the U.S. is that the EU can largely feed off itself, as highlighted in a recent report by the European Central Bank.
“‘The euro area is a large economy in which economic developments are determined mainly by domestic factors,’ the report said. So, ‘overall, the fundamentals of the euro area remain broadly favorable’” (Agence France Presse, Feb. 8).
In a show of confidence in its new position as economic leader of the world, the EU held fast its minimum bid rate for the cost of borrowing in the face of yet another reduction by the Fed in U.S. interest rates.
Noting that the U.S. slowdown could hurt the world economy elsewhere, the European Central Bank boasted, “While a U.S. economic slowdown this year would certainly leave its mark on the rest of the world, as well as Europe, the euro-zone economy would continue to grow at a ‘fairly robust pace’ in 2001” (ibid.).
European Central Bank supremo Wim Duisenburg said during one of his regular news conferences that the ecb continued to anticipate growth in the Eurozone economy would reach “close to 3 percent” during 2001 and 2002.
Confirming Germany’s powerful dominance of the EU economies, figures released in early February showed both manufacturing orders and industrial output for December 2000 at higher-than-expected rates.
The burning question is, having lost its prime position as number-one economy in the world to the EU, will the U.S. ever regain it?