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4 Ways the Global Economy Affects the U.S.

August 26, 2013 by Lazy Man 2 Comments

[Editor’s Note: The following is a post by Annie Davis. She is a freelance writer from Tampa FL who enjoys writing and sharing her financial tips and knowledge.]

If you don’t read global news and financial topics, you might not realize to what extent the global economy affects the U.S. economy. The truth is that every country in the world has an effect on the economy in every other country. Understanding how and where that happens may change your mind about the way you spend and the things you buy.

Importing Items Sees a Huge Impact

Image by Let Ideas Compete

The U.S. gets many goods through importing. The country imports certain foods, fruits, and vegetables that only grow in other, exotic areas, along with all sorts of gadgets such as televisions, smartphones, computers, Blu-ray players, and similar items, because while the goods and materials are here, another country may have more knowledge or a quicker factory or workforce. If the price of the items frequently imported into the U.S. goes up or down because of the global economy or individual economies in Japan or Italy, it affects the American economy as well.

Global Economy Affects Exporting

The U.S. also exports many goods to other countries all around the world. Large items such as cars and trucks, airplanes, and computers are big exporters, because they’re very much needed in other parts of the world. The state of the global economy affects how much money the United States receive for these goods and services, however. When the overall economy is low, the U.S. won’t pull in much money for the items it exports.

Business Loans Aren’t as Easy to Come By

If you’re thinking about starting up a small business, you need to know what’s going on with the global economy. Even though you feel far removed from the rest of the world, it impacts what happens in America. Specifically, there are certain bank regulations coming into play that may well affect your ability to get a loan to start your business.

Banks now have to protect their money, requiring them to assess the risk of lending money to any given business. What happens to your business in Chicago or Tampa could in theory affect the European Central Bank. When you’re ready for a loan, it’s a good idea to know your risk assessment and get firsthand knowledge from a quality source, such as John Ferraro of Ernst and Young, who can even help you do what you need to secure a loan.

Gas Can Crash the Economy

An image chosen by the guest author (seriously) by Jen Gallardo

Gas has one of the biggest effects on the economy in the United States. Drivers here rely on gas from overseas, and oil embargoes and controversies can cause a lot of problems here. You need only look at the current cost of gas to realize that. The New York Times estimates that the average driver in the U.S. pumps 60 gallons of gas every single month. With gas prices ready to increase at any given moment, you can see what the cost of importing fuel does to the U.S. economy.

The economy of the world creates a kind of butterfly effect—and so does the U.S. economy. How does that make you feel about your spending habits?

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Comments

  1. Simon @ Modest Money says

    August 26, 2013 at 4:52 pm

    With “globablization” and the ever shrinking “distance” between nations I think we are going to see the effects you mention and others on a larger scale. Already we are seeing this in say global warming where one nations output affect other distant places significantly.
    Overall though, I doubt there is much we can do about some of these things, we just have to be proactive with our finances in light of the above

    Reply

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  1. Finance Tips: What If Your Income Is Too High for an IRA? says:
    September 2, 2013 at 9:29 am

    […] 4 Ways the Global Economy Affects the U.S. – If macroeconomics isn’t your strong suit, this primer on how exactly the world economy impacts the U.S. will be very helpful. -Lazy Man and Money […]

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