So we think we've got it bad in the U.S., when we witness gross domestic product contracting at annualized rate of 6.3 percent in the first quarter? The Wall Street Journal provides some context:
- Mexico -21.5 percent
- Japan -15.2 percent
- German -14.4 percent
Those are some eye-popping numbers, proof of just exactly how important the American consumer has been to the health of the global economy.
But as a kicker, the Journal throws in this piece of analysis:
The recession's depth is bound to increase pressure to revive the stalled Doha Round of trade talks. Germany intends to raise the issue when leaders of industrialized nations meet in July.
How the World Works generally agrees with the consensus economic opinion that global recessions are exactly the wrong time to move in a more protectionist direction. But I am confused at the premise that a bad global economy will encourage governments in the opposite direction, towards further trade liberalization. Doha "stalled" in large part because powerful developing nations like Brazil and India refused to make any more concessions to the demands of Europe and the U.S. without the richer countries first opening their markets further to the poorer countries' goods. How does that dynamic change when the economies of the U.S. and the European Union are crippled?
More to the point -- it is foolhardy to think that the American consumer will resume pulling the global economic locomotive in the near future. Household wealth in the United States fell by $11 trillion in 2008. We'll be saving our pennies for years to come.