Considerable uncertainty, nonetheless, surrounds the outlook for the United States over the next year or so. The global economy What is the effect of this on the rest of the world? In a previous response to this question, 1 I suggested that there are two key channels to consider.
The first is trade spillovers, as the fall in US income means that the US demands less in the way of products from other countries. The decline in the US dollar also works in this direction.