Even though nations around the planet have struggled to recover from the economic setbacks brought on by the Covid-10 pandemic, one emerged particularly strong. As Kavan Choksi Japan mentions, with a fast-growing economy, falling inflation and a strong labour market, the United States has managed to outpace its counterparts in Europe and elsewhere. When it comes to GDP, the US enjoyed a 3.3% gain in the fourth quarter of 2023, far exceeding the expectations of many economists. That put the country at 2.5% over the course of the year, outpacing all other advanced economies and on track to do so again in the year of 2024.
Kavan Choksi Japan briefly talks about the impressive recovery of the US economy from the impact of the pandemic
The United States economy managed to hold up much better than other countries in terms of recovering from the impact of the Covid-19 pandemic. There are multiple reasons for it, including the trillions of dollars poured into the economy. As the much better than other countries slowed in-person work, and social life almost came to a halt, countries had to grapple with how to support their citizens, especially the ones who lost their jobs or could not work. To deal with this situation, Congress rushed to pass a $2.2tn economic stimulus bill in March 2020 that sent cash into the pockets of American workers, families, and businesses. Two more legislation followed that were designed to keep workforces employed and small businesses afloat. This was among the largest influx of federal money into the US economy in history. A good amount of the money put in the pockets of the households ended up in excess savings.
While nations like Germany, Canada and Japan also went big, the size of the US rescue deal dwarfed what other countries did. Many countries in Europe have a more robust social safety net than the United States, which enabled them to adapt existing programmes without increasing spending. However, this short-term advantage could not make up for the huge gap in stimulus size.
High inflation has been a challenging experience for many Americans, and influenced their perceptions of the economy. However, a robust job market has managed to increase disposable income, thereby fuelling consumer spending. Since February 2022, the US unemployment rate has remained below 4%, matching historic lows. Despite significant price increases, real wages have also risen, with low-income households experiencing some of the most substantial gains. Additionally, in 2023, the U.S. saw a notable surge in productivity, growing at its fastest rate in years. Among other things, one of the key drivers of this trend was flexible labour laws that enabled companies to swiftly reduce workforces at the pandemic’s onset. Even though this caused short-term hardship for workers, it enabled companies to adapt and invest in new technologies.
As Kavan Choksi Japan mentions, the US enjoys another major advantage, which is its ability to resupply its labour market, particularly through immigration at a time when the retirement of the baby boomer generation has slowed population growth. Even though the US did experience severe unemployment due to the Covid-19 pandemic, laid-off American workers were eligible for newly-expanded unemployment benefits, which sent cash directly into their pockets.
