Europe is moving towards another recession and the Ukrainian border has turned into a flashpoint which can ignite any time into a full blown out war. Russia has massed its troops along the border with Ukraine and crippling sanctions have been imposed on it. The war in Iraq is not ending and so is the Ebola outbreak in Africa. It is a depressing scenario worldwide and yet investors in US, Wall Street has largely ignored these factors.
One of the reasons for the robust showing of the United States economy has been the measures taken by the Federal Reserve post the Great Recession. It includes measures like ultra low interest rates which has helped revive the US economy. Employers are hiring workers in greater numbers while factories have boosted production and businesses are making money.
All these have cushioned the Wall Street and the economy from the damage which could be caused due to factors abroad. Investor’s sentiments are high and this is mirrored last week in the last week performance of the Wall Street. The market has remained high most of the time. Reports of a border skirmish in Ukraine have also not dampened the positive sentiments of the investors and most blue chip companies have regained their midday losses by the close of the day.
Still the Global economy is in deep distress. China which has become the second largest economy in the world is still jittery from the aftershocks of runaway lending and investment which helped to fuel much of its growth ever since the financial crisis in 2008.
Japan, Germany and Italy are all staring at a shrinking economy. The global economy is in tenterhooks and it may not take much to derail-an oil spike sparked by war in Iraq, a prolonged recession in Europe or a worsening border situation in Ukraine and Russia can spell disaster.
The unemployment rate in the U.S. has fallen and hiring has spiked in the first seven months of the year. According to government figures monthly job gains stood at a solid and steady 230,000. It shows a spike by 35,000 jobs each month as compared to last year. Fewer people are applying for unemployment benefits and so are fewer hires available to work as temps. Both suggest a healthy job security position. Many experts feel that the cumulative effect of all these measures will help insulate the US economies from the troubles abroad.