While many countries around the world continue to struggle trying to recover from Collide What did you do pandemic Of corona virus, one of them emerged particularly strong. With its fast-growing economy, strong labor market, and low inflation, the United States is in an advantageous position compared to European and other countries around the world.
According to Gross domestic product (GDP), That country reported growth of 3.3% in the fourth quarter of 2023, far exceeding economists’ 2% expectations. In fact, the US outperformed all other advanced economies by 2.5% during the year and is on track to do so again in 2024.
“It is in a much better situation than other countries”said Ryan Sweet, chief U.S. economist at Oxford Economics. “It seems that when other countries’ engines break down, the engine of the American economy keeps revving,” he said. Below we outline three factors that contributed to this recovery.
when the epidemic COVID-19 Individual work and social life came to a halt, as countries grappled with how to keep their citizens at home, including many who lost their jobs or could no longer work.
In March 2020, Congress hurried to pass a resolution economic stimulus law US$2.2 million to send money into the pockets of American workers, families and businesses. Two other laws followed to keep small businesses afloat and the workforce employed. It was the largest investment of federal funds into the American economy in history.
Nearly $5 billion went into the hands of everyone from individuals earning $600 more in weekly unemployment benefits to cash-strapped state and local transit agencies. “I think a whole generation of policy makers have come away with this lesson from 2008 and 2009 If you don’t do big and bold things, problems persist for a long time.says Aaron Terrazas, chief economist at Glassdoor. “If you are indecisive, you prolong the pain. So I think that’s one reason why the fiscal response this time was very strong.
This stimulus is credited with supporting consumer spending, which represents 70% of economic activity. This spending power has been a stimulus despite high inflation.
Ryan Sweet said some of the money put into households’ pockets ended up in excess savings, an emergency fund that Americans can dip into if needed. The magnitude of the US bailout was less than that of other countries, although some countries, such as Japan, Germany, and Canada, also did so on a large scale.
European countries, for their part, have a social safety net Stronger than the US and were able to adapt existing programs without increasing spending. But this short-term gain could not compensate for the large difference in the size of the incentive.
2. A flexible labor market
Hyperinflation was a traumatic experience for many Americans and affected their view of the economy. But labor market forces pushed it Income are available, which are the drivers of consumer spending.
US unemployment rate below 4% since February 2022Which is at historical low level. And while prices rose rapidly, real wages also rose. Low-income households recorded the highest real wage growth.
The US is also enjoying a productivity boom in 2023, growing at the fastest pace in years. According to Julia Pollack, chief economist at ZipRecruiter, it helped Flexibility Labor law, which allowed companies to reduce their workforce at the beginning of the pandemic. This caused short-term suffering for workers, but it allowed companies to adapt to the times and invest in new technologies.
He cited the example of hotels that laid off employees at pre-pandemic levels and did not rehire them. “They have just changed a lot. They introduced self-billing and mobile billing technology. “They reduced the frequency of room cleaning and eliminated room service, as customers now prefer takeout services like Uber Eats, and pick up orders and delivery,” he said.
The hotel has shed much of the load and now sees fit with less intensity on staff, Pollack said, a change that has allowed them to survive and, he says, may benefit workers in the long term.
The United States enjoys another advantage: the ability to replenish its labor market, particularly through immigration, at a time when generational retirement is approaching. baby boom Population growth has slowed down.
The European approach supported companies paying to keep workers on the payroll while businesses are closed. For example, the UK furlough scheme paid employees 80% of their salary and lasted over 18 months.
Unemployment was more severe in the United States, But laid-off workers were able to qualify for extended unemployment benefits, sending money straight into their pockets.
3. (In)energy dependence
According to experts, America is a net exporter of energy and this has contributed to the strength of its economy. When Russia invaded Ukraine in February 2022 and energy prices soared, Europe absorbed far more of the impact than the United States. Germany, a major European manufacturing hub, imported most of its natural gas from Russia through its Nord Stream pipeline. It was inevitable that his productivity would suffer.
Rising energy prices fueled inflation in Europe, experts say “Double shock”: the pandemic and then Ukraine.
The war in Ukraine had a much greater impact on energy prices in Europe than in the United States, said Ben Westmore, who oversees monitoring of the US economy for the Organization for Economic Co-operation and Development (OECD).
Gas prices in Europe to rise by nearly 20% between 2021 and early 2022 He says whereas in the US it was only 3-4%. He points out that not only were prices higher in European countries, but companies were also more likely to pass on these increases to consumers.
“Both factors contributed to US inflation falling more rapidly than in many countries, especially Europe,” he said.