Could the US Stock Market Affect The Global Economy?

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The Impact of The US Stock Market on Global Economies

The US stock market is one of the most important markets in the world and has a significant impact on other markets. In 2017, the US stock market was doing well. In fact, it had been going through a bull run for nine years which made investors from all around the world to invest in it. But in 2018, everything changed when president Donald Trump decided to impose tariffs on steel and aluminum. This affected the global economy because other countries imposed tariffs against American imports that were exported into their country.

  • The US Stock Market has an impact on the global economy – here are 5 ways in which it does so
  • The US Dollar’s Value Affects the Global Economy
  •  International Trade, Deals, and Diplomacy are Affected by the US Economy 
  •  Oil Prices are Driven by the Sandstorm Down Under
  •  Rates for International Debt are Affected by What Happens to Interest Rates in America
  •  The World’s Resources are Influenced by American Consumer Behavior

The US Dollar’s Value Affects the Global Economy

The US dollar is the most popular currency in the world. It is used as a reserve currency by many countries and it influences over 60% of international transactions. Because of this, there’s a high demand for it and thus, the high value of the US dollar. This high value affects the global economy and creates opportunities for other countries to establish themselves as global players in trade and investments.

International Trade, Deals, and Diplomacy are Affected by the US Economy 

The US dollar is the world’s most traded currency and is used in many transactions. The US dollar’s strength (or weakness) can affect economies around the world as well as individual people.

Oil prices are driven by the sandstorm downunder. This is because Australia produces over 25% of oil production in the world. As a result, if there is an issue with oil production in Australia due to natural disasters, it would lead to an increase in oil prices worldwide.

The US Economy has had a significant impact on trade deals and diplomacy. When America’s economy grows, other countries are able to buy into US products more easily and cheaply because they can afford it at that time. When America’s economy falters, other countries find it difficult to buy American products because they cannot afford them at that time

 Rates for International Debt are Affected by What Happens to Interest Rates in America

The rates for international debt are not fixed. They are influenced by what happens to interest rates in America. This is because the two countries share a currency. When the American economy is doing well, this leads to higher interest rates in America, which means that people in other countries will have to offer higher rates on their sovereign bonds for investors to have any interest in them.

Some economists have argued that when the American economy does well, the world benefits too because there is more demand for exports from other countries and more capital flows into emerging markets. However, if the American economy does poorly then this could spill over into other economies around the world because of trade linkages and financial market integration.

The World’s Resources are Influenced by American Consumer Behavior

The world’s resources are influenced by the American consumer behavior who is one of the most powerful members of society with access to almost everything. For example,

(1) Americans are the second highest per capita consumers in the world which means that they consume more than their fair share of natural resources.

(2) The US produces about 20% of global greenhouse gas emissions.

(3) Americans consume 80% more electricity than Europeans, but only generate 30% more  electricity than Europeans on average per person.

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