Is the US economy as strong as it seems?

Whatever happens in China and other emerging economies, whatever the seriousness of Japan’s difficulties to escape deflation, whatever the political and economic challenges the EU is facing, most of the officials, bankers and analysts keep repeating that the United States’ economy is strong. Even better, the prospect of a Fed rate hike this month or in several months will make the US the main beneficiary of this fragile environment for world economic growth.

The national GDP expanded an annualized 3.7% in Q2 2015 and the unemployment rate edged down to 5.1% in August 2015.  The foreign direct investment (FDI) position in the US valued at historical cost grew 5.3% to $2,901.9 billion in 2014, and trillions more could be adding up if investors likely shifted away from emerging markets thanks to both degraded economic conditions and the Fed’s rate hike.

Although the overall background does theoretically constitute a positive for the US, growing difficulties abroad should likely impact the US financial markets at some point in the future, with yet unknown consequences on the real economy.