The U.S. economy outperforms its rich counterparts in recovering from the pandemic-induced crisis. Despite numerous challenges including wars, geopolitical tensions, pandemic aftershocks, high inflation, and high credit costs, the U.S. stands out. In Q3 2022, U.S. GDP growth was staggering at 5.2%, outpacing China, traditionally the world's growth engine.
Innes McFee, Chief Global Economist at Oxford Economics, expresses, "The U.S. has truly outshone other nations this year." The U.S. now leads the EU, the UK, Japan, Canada, and other advanced economies.
The Organization for Economic Cooperation and Development (OECD) recently revised its U.S. growth forecast for 2022 and 2023, while lowering predictions for 20 Euro-using countries. The International Monetary Fund (IMF) made a similar move in October.
Currently, the IMF projects U.S. GDP to grow 2.1% in 2022 and 1.5% in 2024, surpassing the UK's growth projection and outpacing the Eurozone's expected growth rates of 0.7% and 1.2%, respectively.
The reasons behind the divergent paths of the world's most advanced economies include energy price differences, pandemic-era stimuli, and higher interest rates. However, there are also longer-term structural factors that have favored the U.S., such as:
Labor Market Flexibility: The U.S. has a more flexible labor market, which allows businesses to adapt more quickly to changing conditions.
Technological Innovation: The U.S. leads globally in technological innovation, attracting inventors and entrepreneurs worldwide.
Deep Capital Markets: The U.S. has robust, liquid financial markets that foster international investment and borrowing.
Highly Skilled Workforce: The U.S. benefits from a highly skilled workforce, with immigration playing a role in enhancing human capital.
Robust Governance: The U.S.'s system of governance, with its checks and balances, provides stability and predictability to economic policies.
Abundant Natural Resources: The U.S., a world leader in energy production, has a wide range of natural resources, including being the largest producer of liquified natural gas and nuclear energy.
High-Performing Higher Education System: The U.S. has a top-notch higher education system, driving innovation and producing highly skilled workers.
Global Leadership in Emerging Technologies: The U.S. is a global pioneer in emerging technologies, attracting investment and talent worldwide.
Yet, the U.S. economy is expected to decelerate in the remaining months of 2022 due to shrinking savings and persistent high credit costs.
References
- "Why the United States Has a More Flexible Labor Market than Europe" [source]
- "The Impact of Immigration on the United States' Labor Market" [source]
- "U.S. Energy Production and Dependence" [source]
- "The Importance of Governance in Attracting Foreign Investment" [source]
