An Update on the American Economic Recovery

Financial expert Mohamed El-Erian says the American economic recovery is underway but still too fragile to sustain rapid growth. Educating workers will be a key source of growth. 

What's the Latest Development?


Several signs indicate the American economic recovery is underway: monthly employment gains, an uptick in manufacturing supported by an export surge, a housing sector that seems to have reached bottom, easier access to consumer credit, and businesses are beginning to spend their massive cash buildups taken as a precautionary measure against further decline. Yet substantial structural limitations remain, says finance expert Mohamed A. El-Erian. Investment in infrastructure and education will prove crucial in the coming years to lock in the emerging recovery. 

What's the Big Idea?

A solution to America's budget crisis must also be found. An economic recovery is the best way to generate the tax revenue needed to pay down the bills, incurred through profligate spending and a massive economic rescue package. And while external concerns persist, such as Europe's sovereign debt crisis and the political standoff with Iran (which controls the sea route through which 20% of the world's oil flows), America remains by far the world's largest economy and the anchor of the international monetary system. Depending on how the recovery goes, that could be good news or bad. 

Photo credit: shutterstock.com

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