While countries around the world have struggled to recover from the economic setbacks brought on by the pandemic, one has emerged particularly strong.
With a fast-growing economy, a strong labour market and falling inflation, the US has outpaced its counterparts in Europe and elsewhere.
In terms of GDP, it posted a 3.3% gain in the fourth quarter of 2023, far exceeding economists’ expectations of 2%.
That put the US at 2.5% over the course of the year, outpacing all other advanced economies and on track to do so again in 2024.
Experts say that there are several reasons why the US is outperforming other nations.
1. Pouring trillions into the economy
When the Covid-19 pandemic slowed in-person work and social life to a halt, countries had to grapple with how to support their stuck-at-home citizenry – including many who lost their jobs or couldn’t work.
In March 2020, Congress rushed to pass a $2.2tn economic stimulus bill that sent cash into the pockets of American workers, families, and businesses. Two more pieces of legislation followed to keep small businesses afloat and workforces employed.
2. A flexible jobs market
High inflation has been a painful experience for many Americans and has shaped their view of how the economy is faring.
But a strong jobs market has helped disposable income, which is the engine behind consumer spending.
The unemployment rate in the US has been below 4% since February 2022, which is on a par with historic lows. And while prices climbed steeply, real wages have risen too. Low-income households have seen some of the strongest real wage growth.
3. Energy (in)dependence
The US is a net exporter of energy and experts say that’s helped the US economy’s strength.
When Russia invaded Ukraine in February 2022 and energy prices soared, Europe absorbed the impact much more than the US. Germany, a major European manufacturing hub, relied on Russian natural gas through the Nord Stream 2 pipeline. Its productivity took a hit.
Higher energy prices pushed up inflation in Europe, in what experts called a “double-shock” – the pandemic and then Ukraine.
Source: BBC
