One of the more underdiscussed economic developments following the shocks of the pandemic has been the United States’ outperformance compared to its peers.
This success can be traced to bold monetary and fiscal policies put in place that have hardened supply chains, bolstered energy independence and started to rebuild the nation’s infrastructure.
Since 2020 real U.S. GDP has increased 9.4% compared with:
- Canada 4.9%
- Italy 4.7%
- EU 4%
- France 3.8%
- Japan 3.1%
- UK 2.3%
- Germany 0.3%
Perhaps more important, the U.S. is approaching what I think is a productivity boom.
If one asks how the U.S. can grow so fast even as hiring slows, the answer is productivity. With productivity increasing at 2.7% year over year, the American economy is experiencing its best gains in that area since the boom from 1995 to 2004.
That is why wages are rising above inflation, corporate earnings and profits are increasing and the U.S. continues to outperform its peers.
It’s all a result of smart decisions after the pandemic that increased supplies across the economy and encouraged long-term investments that integrate sophisticated technology into the production process.
Virtuous cycle
The result has been a virtuous cycle, where rising productivity brings improving living standards for American households and rising profits among U.S. businesses.
Consider Americans’ incomes. Gross national income per capita in the U.S. since 2020 is surging compared to other major economies. That rise does not include the efficiencies that will occur because of artificial intelligence and quantum computing that lie ahead.
Read more of RSM’s insights on the global economy and the middle market.
The takeaway
While it may be fashionable among the recessionista doom-scrollers to ignore the fundamental improvement in the American economy, they do so at their own peril.
The U.S. economy is outperforming in growth and employment, and in controlling inflation, without causing the economy to fall into an extended period of slow growth or outright recession. It’s a remarkable policy achievement.
Those who recognize the significance of this achievement and who have the skill to manage the risks around the outlook and make critical investments will be the winners.
