US Economy Falters in the Face of Global Competition

Heh. Has it come to this? Sweden, that notorious bastion of socialism, is a better place to do business than the United States.

So it has…at least according to the World Economic Forum (WEF), the outfit that puts on the big annual shindig for the rich and powerful in Davos, Switzerland.

Two years ago, the United States were still No. 1 in the WEF’s eyes. Then last year, Switzerland took over the top spot. Now both Sweden and Singapore have vaulted ahead.

The WEF surveyed 13,500 people in 139 countries to establish their rankings. The US has lost ground due to both a “weakening of public and private institutions,” say the data crunchers. “Lingering concerns about the state of its financial markets” don’t help.

Sweden, by contrast, has “the world’s most transparent and efficient public institutions, with very low levels of corruption and undue influence.” Which loosely translated from wonk-speak sounds like, “You’re better off dealing with honest socialists than crony capitalists.”

In any event, here are the WEF’s top 10…

WEF Competitive Economies

As if to underscore the WEF’s assessment…and knock out another support column for the “recovery”…the Federal Reserve’s Beige Book is losing some of its lily-white sheen. The period from mid-July through the end of August brought “widespread signs of a deceleration.” Of the Fed’s 12 regional banks…

  • Two report healthy expansion (Boston and Cleveland)
  • Five report moderate expansion
  • Five report mixed or slowing conditions.

Oddly, the stock market seemed to like this report, rising steadily after its release. Perhaps traders are buying into the Fed’s “New Goldilocks” thesis – something we identified back in April.

That is, growth is too slow to return to full employment anytime soon, but still strong enough the Fed won’t have to resort to full-bore quantitative easing, at least not for a while.

In the “New Goldilocks” economy – instead of “just right,” we get lukewarm. We’re happy with it. Except the porridge keeps cooling. And there’s an autumn breeze blowing in the kitchen window.

Addison Wiggin
for The Daily Reckoning