International Economic Crisis

The world’s second, third and fourth largest economies are, like Chicago, suffering through the international financial and economic crisis. Japan’s economy, which barely recovered from over a decade of zero-growth, is once again heading toward recession. Germany is now officially in recession. China is facing the greatest economic slowdown since reforms launched its opening to international trade over thirty years ago. All three countries are implementing stimulus packages to shore up their domestic markets in the face of slowing international trade and sagging demand for their industrial production.

The stimulus plans implemented by all three countries would look rather familiar to citizens of Chicago, as they share many of the same elements as the stimulus package offered by Washington. Infrastructure, housing, tax cuts, and transfer payments to farmers are the leading elements of each plan. Questions remain about whether these infusions of capital into the system will work and if domestic consumption can be increased enough to off-set decreased demand for exports. In all cases; Chicago, Japan, Germany and China; questions arise if the stimuli are enough to carry people through the hard times. Areas not addressed in any stimulus package are how to meet unexpected medical bills, pay for education, and provide for income during retirement; three of the biggest issues on the minds of Americans.

The result of this economic turmoil in the world’s largest economies will have many repercussions for Chicago. Japan, Germany and China accounted for a total of $8.4 Billion in exports from Chicago in 2007. Over sixty American companies based in Chicago operate in at least one of these countries, while companies from these countries provide Chicago area citizens with multiple thousands of jobs. An economic slowdown in Japan, Germany and China will lead to less work for the people of Chicago and more expensive goods at Wal-Mart, Target, your BMW and Toyota dealers. What is clear is that Chicago is not suffering through the economic crisis alone. The world is suffering with it, and this will challenge every consumer between Lakeshore Drive, Tokyo, Berlin and Beijing.