In the world's largest national economy, consumers have long been the engine of growth. As they earn more and spend more, corporate profits go up and the stock market rises. That's still true, but America's consumer engine isn't running nearly as well as it should, for two big reasons. One is unemployment, the other is the issue of mortgage debt and the housing bust.
A high jobless rate means many households face a big income cut. People who do have jobs worry about their employment security and prospects for raises.
The housing bust, meanwhile, pushed down the net worth of millions of families. Some 11 million mortgage borrowers were in a "negative equity" position in the middle of this year, with loan balances larger than the value of their home.
Many households have made progress in paring their debt obligations, such as by refinancing at lower interest rates. But economist Gary Shilling says that what he dubs the "age of deleveraging" will be here for a while.
All this means that the US economy, like those in Japan and in advanced European nations, seems to be moving in slow gear or worse. But the world economy will keep growing because so-called emerging-market nations are an important bright spot, right? Well....