“New normal” means major change – US Fed

Tarullo.jpgThe blog has argued for some time that the chemical industry is facing a “new normal” as growth returns to the economy. Now US Federal Reserve Governor Dan Tarullo has helpfully spelt out some important changes that he expects to occur. He notes that:

“Just about everyone understands we will never return to the credit markets of the middle part of this decade”
• “The habit of building personal savings predominantly through appreciation of one’s home is one that Americans will have to change.
• “The growth models of emerging market countries dependent on unshakeable American consumption and ever-increasing borrowing will not be sustainable even as recovery becomes more established.”

Tarullo also highlights the fact that “very few people believe they understand what the “new normal” will look like once the crisis has fully passed and the economy is on a sustained recovery path.” He adds that “I suspect that this uncertainty is itself an impediment to stronger growth, since it makes financial planning more difficult.”

The blog will aim to answer some of these key questions, as they relate to the chemical industry, when it presents its annual Budget Outlook next weekend.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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