"America's extraordinary economy keeps defying the pessimists," The Economist writes in a new cover story.
You have to marvel at America’s economy, it says. Not long ago it was widely thought to be on the brink of recession. Instead it ended 2023 nearly 3 percent larger than 12 months earlier, having enjoyed one of the boomier years of the century so far. And it continues to defy expectations.
At the start of this year, economists had been forecasting annualised growth in the first quarter of 1 percent; that prediction has since doubled. The labour market is in rude health, too. The unemployment rate has been below 4 percent for 25 consecutive months, the longest such spell in over 50 years. No wonder Uncle Sam is putting the rest of the world to shame.
Since the end of 2019 the economy has grown by nearly 8 percent in real terms, more than twice as fast as the Euro Zone’s and ten times as quickly as Japan’s. Britain’s has barely grown at all.
This is helped by a growing workforce. America has 4 percent more workers than it did at the end of 2019, thanks in part to rising workforce participation, but mainly owing to higher immigration, The Economist notes. Adding: The foreign-born population is up by 4.4m, a figure which may undercount those who arrived illegally.
Other long-standing strengths have made America enviably placed to cope with geopolitical tumult. Its vast internal market encourages innovation and means it depends less on foreign trade than smaller rich economies do. And, due to the fact that the shale boom of the 2010s made America a net energy exporter, it has in aggregate benefited rather than suffered from the high energy prices that hit the wallets of Europeans - thanks to Putin's "special military operation" and the bloc's pre-existing over-reliance on Russian gas.
The Inflation Reduction Act, the landmark climate legislation passed in the United States in 2022, has resulted in billions of dollars being injected into the green economy. This had an immediate impact and will continue to do so for years to come. For example, in the six months since the IRA became law in August 2022, clean energy companies announced more than 100,000 new jobs for electricians, mechanics, technicians, and other workers required to accelerate the country's abandonment of fossil fuels.
The U.S. is “at the precipice of a renewed manufacturing, made in America boom that will create opportunities for millions of Americans,” Climate Power’s executive director, Lori Lodes, said in a statement at the time.
No wonder - according to the Axios Vibes survey by The Harris Poll in January this year - Americans are upbeat about their economic situation.
The Economist concludes: America has thrived as its companies and workers have innovated and adapted to a rapidly changing world.
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