If you listen to America’s borders, you might hear the sound of a booming economy. To quote Gordon Lightfoot, “Hear the roar of a mighty engine.” “Silver Bird in a High Place”
Aren’t Americans usually able to rely on their economic strength and entrepreneurship to lead the way and save the day? They’re doing it again.
This week, the Washington Post trumpeted that “lower inflation and higher growth have led to the world’s strongest economic recovery.” That’s not an exaggeration. And what a stunning departure from the prevailing “America is failing” storyline.
By comparison, China’s arch-rival, China, is in dire straits. Competitors in the G7 lag far behind on a wide range of economic indicators. Canada’s economic growth rate in November was 0.2%. America’s GDP grew by 3.3%.
Bidenmics has been widely derided by Republicans. But the Cassandras, who have repeatedly predicted a recession, can take their word for it. Please swallow it whole.
Forecasters expected U.S. growth last year to be below 1%. The result was 3.1%. Inflation will almost reach the Federal Reserve’s guideline of 2% and fall to 2.6%. Unemployment is low, consumer confidence is at its highest level in two years, and the stock market is at record levels. As Treasury Secretary Janet Yellen has said, wage growth is “endemic to our nation’s recovery.” The growth rate after inflation was 2.8%, which is much higher than the others.
At a time when an unstoppable wave of migrants is flooding the country’s southern border, democracy is under siege by Trumpism, and its global standing is threatened, the economic resurgence comes as a welcome relief.
For President Joe Biden’s Democratic Party, this is great news in an election year. For other jurisdictions, like Canada, it matters. Protectionist pressure is growing in Washington within both parties. As expected, if the economy continues to rise, these pressures will ease.
Mr. Biden’s good news is largely unappreciated. Just as countless millions continue to believe Donald Trump’s rants that the 2020 election was stolen from him, so too do they believe him when he talks about economic carnage. There is. He’s not the only one doing this. What about Nikki Haley, the only person left in the race for the Republican nomination? “The economy is in shambles and inflation is out of control,” she claimed a few days ago. What was she smoking?
Economic strength is one of Trump’s main selling points, and he would have won the 2020 election had the coronavirus pandemic not occurred that year. He cannot afford to let Bidennomics undermine his own advantage.
America’s economic recovery has been fueled primarily by pumping money into people’s pockets through massive government spending. In a sense, it is a return to the Keynesian stimulus model.
Governments in other countries have also implemented large fiscal stimulus measures, but none have come close to the US government, which poured in US$3 trillion in 2020. According to the International Monetary Fund, the stimulus package was equivalent to 25.5% of gross national product. Other G7 countries had less than 20%, with the exception of Canada, whose 2022 level was 21% of GDP.
Biden served as President Barack Obama’s vice president during the 2008 global financial crisis. Since then, the prevailing theory has been that the Obama administration, handicapped by facing a Republican Congress, did not provide nearly enough stimulus, which delayed the economic recovery. Biden learned from that mistake.
All the spending seems to be going well now, but it came with a lot of pain. Economic analysts say it contributed significantly to the rise in inflation, which reached its highest level in 40 years in 2022. The country’s debt burden is now staggering, nearly double Canada’s share of GDP.But in the US it’s not a high-profile issue
The U.S. turnaround comes at a time when China’s economy appears to be stumbling. This would boost American pride, given that there is much talk of China replacing the US as the world’s dominant economic power.
Indeed, other countries, including Canada, could only hope for the extraordinary enterprising spirit displayed by the Americans. In response to the massive job losses caused by the pandemic, new businesses were launched in the United States at an impressive pace, which continues to this day and is fueling an economic recovery.
Lately, we’ve been questioning so many features of the American way. There is no need to question the economic exceptionalism that gives them their greatest competitive advantage.