The U.S. and the global economy

The current economic woes have affected economies around the world. When U.S.

stocks tumbled following the collapse of investment giant Lehman Brothers and troubles

at insurance monolith AIG in 2008, the devastation on Wall Street reverberated around

the globe. Within hours foreign markets began a downward spiral, and it’s been a roller

coaster ride ever since.

Globally connected

There are a number of reasons why Wall Street has a domino effect beyond our

borders. One contributing factor is that over the years, as global trading and foreign

investments have increased, world economies have grown increasingly interdependent.

U.S. companies are heavily invested in foreign markets, and vice versa, making us all

vulnerable to international events that affect stock values, which can include everything

from political upheavals to natural disasters, poor investment decisions, fraud and more.

Overseas operations

The United States has also become less financially insular as more U.S. companies

have expanded their overseas operations. We’ve all read the media reports about

manufacturing, customer service and technical support jobs flowing over seas, further

globalizing businesses.

Due to advances in technology and financial infrastructures, businesses are able to

move more quickly. Reliance on electronic financial transactions, which enable lightning-

fast debits and credits, have removed buffers that once helped delay and sometimes

temper the reaction of markets when the world traded at a snail’s pace. Improvement in

the transportation of goods has also helped accelerate the interdependence of global

economies.

Government efforts

The U.S. government is influential as well. With influence comes control, and the

U.S. has prided itself on being an economic superpower for the last century. According to

the Federal Reserve, the U.S. dollar is the most preferred transaction currency around the

globe, accounting for half of the world’s foreign exchange reserves, and the U.S.

Treasury would certainly like to keep it that way. The Federal Reserve regularly conducts

financial business with foreign countries to intentionally boost the value of the dollar.

If the fragility of the U.S. economy gives you jitters, your concerns are not

unfounded. Our business community needs to work harder than ever to ensure innovation

and free enterprise prevail, create jobs and bolster demand for U.S. goods and services.

For the U.S. to continue to prosper, we need to excel in every way, including

productivity, foreign relations, fiscal policies, health care, education and more.

Despite recent events, history shows the cyclical nature of the stock market and

points to a strong likelihood we will weather this financial storm and come out on the

other side stronger. As fear subsides, confidence should return and help American

businesses get back on track toward rebuilding the U.S. economy and thereby improving

the global economy.

The strength of the U.S. economy depends on the willingness of consumers to

spend and invest in American businesses. Talk to your financial advisor to discuss your

financial goals and your risk tolerance before you invest. You can diversify your portfolio

by choosing from an array of U.S. and foreign investments that match your risk tolerance

and time horizon that are balanced to help you avoid excessive exposure to one class of

investments.

Daniel J. Lensing, CPRC

Financial Advisor

Business Financial Advisor

Ameriprise Finanical Services, inc.

14755 No. Outer 40, Suite 500

Chesterfield, MO 63017

Tel: 636-534-2097

This column is for informational purposes only. The information may not be suitable for

every situation and should not be relied on without the advice of your tax, legal and/or

financial advisors. Neither Ameriprise Financial nor its financial advisors provide tax or

legal advice. Consult with qualified tax and legal advisors about your tax and legal

situation. This column was prepared by Ameriprise Financial.

Financial planning services and investments offered through Ameriprise Financial

Services, Inc., Member FINRA & SIPC.

© 2009 Ameriprise Financial, Inc. All rights reserved.

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