Andrew Sheng

Opinion | How much longer will a disunited world debt-fund America’s expansion?

The US has returned to growth, with a strong stock market and lead in AI technology but the global leadership contest is far from over and counting on the US as the key engine of recovery is simply not realistic

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President Joe Biden delivers the State of the Union address to a joint session of Congress at the Capitol on March 7. Photo: AP

Andrew Sheng

Published: 4:30pm, 22 Mar 2024

On March 7, US President Joseph Biden delivered his State of the Union address. This was his energetic bid for re-election over Donald Trump, to allay concerns about his age and stamina, show America’s strength and call for continued support for Ukraine. More than six in 10 Americans responded positively to the message, according to a CNN flash poll.

Ten days later, Vladimir Putin, mentioned seven times in Biden’s speech and seemingly likened to Hitler, was re-elected as Russian president with 88 per cent of the vote. Clearly, the state of global order is less of a union and more of a disunion or polarisation. Prices of gold, a safe haven, has hit record highs of over US$2,222 per ounce.

In the United States, major stock indices, including the Dow Jones Industrial Average, S&P500 and Nasdaq Composite, rose to record highs this week after Federal Reserve chairman Jerome Powell confirmed that plans for interest rates cuts this year.

In a way, it feels like the US has never had it so good. Last year, its stock market grew by more than US$10 trillion. With the boom in artificial intelligence (AI), Nvidia alone added US$1 trillion to investors’ wealth this year.

In a grand overturn of recession fears, the US economy closed out the year with 3.2 per cent growth in the last quarter, managing an annual expansion of 2.5 per cent – on a par with the World Bank’s global growth forecast of 2.6 per cent. With global economic expansion set to slow this year to 2.4 per cent, the US could still tread water at around 2 per cent.

But while the US is able to sustain growth through its growing fiscal and trade deficits, albeit a worrying debt habit, much of the rest of the world is languishing.