Predictions are coming in for the US and world economy in 2011, and the future may not be bright for Western superpowers. While some signs indicate the economy is slowly recovering, world economists are more confident in China’s strength than that of the US or Europe.
China and other emerging powers could surpass the US and Western Europe as industrial powers. The US has huge trade and budget deficits, while China has a huge trade surplus. Such imbalances in world trade can be harmful to the world economy. President Obama is encouraging China to increase their imported goods, opening more of the economy to other exporters, but efforts have so far been unsuccessful.
An article on Economy2011.org has predicted that China will surpass the US in industrial production. The US has been the leading industrial power for 110 years. Europe’s economy is likely to fare much as that of the US.
The 6% decline of the world’s economy in 2009 was the worst since World War II, according to the Christian Science Monitor.
Signs late in 2010 that the US economy might be recovering may actually be signs that 2011 will be worse. The tax cuts implemented by Bush expired January 1, 2011. Economist Arthur Laffer said that the slight recent rise in the economy was due to a shift in spending ahead of the higher taxes to come.
When the tax cuts expire, Laffer expects higher taxes on every level – local, state and federal. He predicts sharp rises in dividend taxes and capital gains taxes. He predicts estate tax, now at zero, to soar to 55%.
These taxes are expected to stifle business growth in the US and cripple the real estate market even further. Reintroducing the “marriage tax” could lead to more home foreclosures. By 2013, he expects to see much higher taxes on payroll and income earned outside the US. His estimates put the US on a course that could be far worse than the Great Depression.