News Analysis: Sluggish global economy could have negative impact on U.S.

The external shock by a sluggish global economy could spark ripple effects in the U.S. economy and have a negative impact, U.S.-based experts warned.

This comes as the International Monetary Fund (IMF) on Tuesday slashed its global growth forecasts for the fourth time this year -- to 3.2 percent from 3.4 percent in January -- citing factors such as sluggish advanced economies and low oil prices.

The IMF, whose spring meetings are to be held in Washington D.C., capital of the United States, later this week, warned of widespread risks of economic stagnation and vulnerability to shocks such as geopolitical conflicts and currency depreciations.

"The U.S. is very much integrated into the global economy both through trade as well as through international financial markets. As such, the global economic and financial market outlook has a large bearing on the U.S. economic outlook," American Enterprise Institute's resident fellow Desmond Lachman told Xinhua.

Everything depends on how severe is the global slowdown and whether or not global financial markets get hit by a shock coming from such as the "Brexit," a British exit from the European Union, Lachman said, referring to a referendum to be held in June in the United Kingdom to determine if it should leave the EU.

Indeed, the IMF said Tuesday that a so-called "Brexit" would disrupt trade ties and cause "major challenges" for the UK and for the EU.

If any of those events were to occur, the U.S. economy would certainly feel the impact, Lachman said.

When asked about the worst case scenario, Lachman said it would be that the U.S. economy gets hit by an external shock like "Brexit."

"The reason that I worry about the rest of the global economy is that at present we have an unusually large confluence of external risks, very high debt levels in a number of key countries, and limited room for policy reaction to an external shock," he said.

"For that reason, I believe that the Fed is right not to rush into raising U.S. interest rates," he said, referring to the U.S. Federal Reserve's reluctance to boost interest rates.

CRAZY POLITICIANS COULD KILL THE U.S. ECONOMY

Still, other economists have a rosier picture of the U.S. economy, although they warn that the election of the wrong political candidate -- and there are many bad choices, they say -- could have a disastrous impact on the U.S. economy.

Brookings Institution's senior fellow Barry Bosworth told Xinhua that the biggest risk "may be the crazy policy positions of most of the presidential candidates."

The exception is Democratic front-runner Hillary Clinton, he said.

"But the election of (Bernie) Sanders, (Donald) Trump or (Ted) Cruz would have very negative implications for the U.S. and global economy. The U.S. is experiencing a major wave of anti-global populism," he said.

Both Trump and Clinton currently lead their parties, although Cruz is hanging in there and Sanders is giving Clinton a run for her money.

THE HEALTH OF THE U.S. JOBS MARKET

On the U.S. jobs situation, while it is not the brightest spot according to U.S. norms, it is healthier than in many other nations, experts said.

While the U.S. job market has not fully recovered from the 2008 global economic downturn, Lachman assessed it as "relatively good, especially when compared with that in Europe."

"Whereas over the past six years overall U.S. unemployment has declined from over 10 percent to below 5 percent that in Europe remains over 10 percent," he said. "Having said that, one has to be disappointed with the very low participation rates in the U.S. as well as with the large number of discouraged workers. This does leave much room for further improvement."

While the U.S. jobless rate stands at 5 percent, critics note that the indicator does not tell the full story. For example, if an unemployed engineer cuts his neighbor's grass for a day and earns a few U.S. dollars for it, he will be considered employed for that week by the U.S. definition of employment.

Many economists point to what they bill as the more accurate labor force participation rate. Like the name implies, the indicator measures the percentage of people participating in the work force, which stands at 63 percent -- a low not seen in decades.

The jobs picture, however, is particularly good for university graduates in Washington D.C., where jobs are plentiful in many fields and wages are high. That sits in sharp contrast to many other parts of the United States, which are economically struggling. Endit