The incredible unsinkable American economy

An employee working to manufacture diesel truck engines at a plant in Columbus, Indiana, in the United States. For the world economy, and for Singapore, in the age of silicon and software no less than in the age of rubber and tin, decoupling from the US economic engine, is not an option, says the writer. PHOTO: BLOOMBERG
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I first arrived in the United States in September 1972, to pursue postgraduate studies in economics. That gave me a prime vantage point from which to view the 1974-75 severe recession, when high unemployment was followed by persistent high inflation, both in the double digits, which economists dubbed "stagflation". We students ridiculed president Gerald Ford's Whip Inflation Now or WIN buttons (1974), and devoured books with titles like The Fiscal Crisis Of The State (1973).

The Federal Reserve raising interest rates eventually choked off inflation but also gross domestic product (GDP) growth, resulting in another recession in 1981-82, by which time I was myself teaching this subject matter to (mostly) American students. I was also continuing my research on the export-oriented multinational electronics industry in South-east Asia. It gave me another ringside seat, this time to the Singapore economy, heavily dependent on exports to and investment from the US, dutifully following suit by falling into recession both times.

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