Why do you think the US economy is doing better than the rest of the rich world?

33 comments

1. I am not an economist and only understand basic personal finance… so the reason is undeniably that we’re awesome.

2. IMO, its because America loves and encourages investment.

   That’s why Europeans (and really, many people all over the world) come here to 2-4x their salary/career when it comes to fields like software, law and medicine. It’s also much harder to be an entrepreneur in Europe than in the US.

   As far as inflation and COVID. I believe the US was in a better position before COVID but also a lot of people understood you can’t just hit “pause” on the economy and expect it to recover like nothing happened. So there was some mitigation there… but again, I mean look at a ton of EU countries. Stagnant growth isn’t new, its been the norm for the last 10+ years. France, Italy and Spain haven’t recovered from 2008 yet, to put it in perspective.

3. EU’s more directly effected by the war in Ukraine. Australia and NZ are tiny fish and tiny fish are less flexible in tough times.

4. 1. The US has always had way more investment money around than anywhere else on the planet, so even after the Covid crash there was still more money left around. Been that way for nearly a century, and Covid didn’t change that.

   2. A huge part of Europe’s struggles have been pains in the energy market due to having to cut off reliance on Russian natural gas. The US’ energy market is much less dependent on Russia, and we have an extremely strong energy sector (which is rare among first-world nations, I believe) so much of the US actually benefits when energy costs are high.

5. Military and more direct power over the 3rd world

6. Massive energy supplies and a flexible labor market.

7. You omitted a healthy demography.

8. Immigration maintains healthy influx of skilled workers compared to the rest of the West (to such a degree that brain drain from Western Europe is directly benefiting the U.S. and has only increased in recent years), our government isn’t having to cut programs to redirect funds to the military thanks to Ukraine, larger foreign investment and more baskets for more eggs, and we didn’t make our energy supplies dependent on a psychopathic dictator (looking at you, Germany).

   We also started off from a better position precovid. Countries like France, Italy, and Spain haven’t recovered from *2008* whereas the US economy not only recovered but has exceeded itself. Our productive workforce and economic policies gave us flexibility that some Western states simply do not have.

9. We have resources that no other country has. We don’t need global trade.

10. We got McDonald’s money

11. The US focuses almost all of its efforts on its economy and has generally competent institutions and businesses. The rest is scale.

12. We have more of all the things. Skilled educated people, things that come out of the ground and infrastructure to process them, more innovation and entrepreneurship, and despite the headlines we have a robust political system that scales well (fed-state-local) are all part of it. Also the more of a thing you have and having the diversity of many different things you can more easily deal with hard times and make it through.

13. I like money

14. Mostly being larger and more robust, and having the World adopt your currency helps as well.

    Also transportation of goods are considerably cheaper due to the Inland river networks, Highways, and the largest Freight Rail system in the World.

15. A point a lot of people gloss over is that the dollar is the reserve currency. Essentially every country that wants to do trade internationally must stockpile dollars in their banks. China alone has 3 TRILLION in reserve, our good friends in Russia have 600 billion. Essentially every single country on earth has some amount. That amount of dollars being stored outside of the country is a great means to limit inflation at home

16. Well this has been true since the 2008 crisis. With the exception of the ex-Communist States the USA has consistently out grown Europe despite having been richer before. The reasons are:

    * Immigration influx increasing the number of workers and specialization
    * Easier access to capital for investment. Its not just one or two industries the USA is more productive across the board.
    * The service industry is probably more productive because lots of chain stores push up productivity
    * Overall strength has been geographically even, while Europe has some very poor performers (Spain, Italy, Greece)

    As for the most recent period of time, its probably the Ukraine War, but this has been going on for a decade.

17. I would argue mainly due to the fact is that WW2 left scars that are still healing overseas and the US still acts as the standing military for many NATO states while we actually benefited from WW2 jump starting our at that time dieing economy which left us on a much better starting point than other countries after the war and we only continued to grow in modern times which gave us a much better starting point going into COVID though I’m sure many much more educated people in the comments have other reasons.

18. Someone else mentioned that EU countries are closer to and thus more directly affected by the situation in Ukraine than we are, and I think that has a lot to do with it.

    We also didn’t have the strict COVID lockdowns that other countries had (especially NZ) and thus haven’t felt as much of an economic impact.

    In addition to their extremely strict lockdowns, which crippled tourism and work travel, NZ has faced several weather disasters in the last year. I have a couple of coworkers there who’ve been directly affected by the cyclone earlier this year and massive floods.

19. [https://worldpopulationreview.com/state-rankings/gdp-growth-by-state](https://worldpopulationreview.com/state-rankings/gdp-growth-by-state)

    Part of it is that the south is experiencing rapid growth which bumps up the average. And the usually quickly growing countries in Central and Eastern Europe (Czechia, Poland, etc.) which usually bump up the EU average are disproportionately hit by the Ukraine war and related agricultural shocks, so many of those countries are in recession right now.

20. Mostly because the Fed and Congress have adopted policies to both combat inflation and increase spending (without increasing taxes).

    * The Federal Reserve is an autonomous organization of the federal government that controls the central bank and money supplies including interest rates. Setting interest rates higher is a HUGE factor in reducing personal and business spending (because it costs more to borrow money). The fed has to be autonomous since raising interest rates – while good for combating inflation – also makes things like buying a car or house more expensive (so often unpopular with politicians and uninformed voters).
    * The Federal Government is also still spending a lot of money, particularly through Build Back Better, but also residual left over Covid funding states and local governments are using to invest in various communities. Unlike Europe which favors austere belt tightening measures, the US is spending more money to fuel the economy

    Furthermore, there’s other contributing factors to the labor shortage and both higher wages and higher prices:

    * The slow trickle of new work enabled immigrants have slowed, causing a shortage of labor.
    * On top of that many workers up skilled during the pandemic, leaving the service industry without lower wage workers
    * Boomers also started to retire en masse leaving a labor shortage for almost every industry without enough young people to fill though roles.

    Meanwhile, taxes remain at a near all time low (Trump tax cuts, Bush tax cuts).

    So the high interest rate is effectively combating inflation, taxes are still at historical lows, and government and personal spending is still high. The continued labor shortage means even though spending has started to contract, it’s not enough to have a meaningful effect on the work force yet (unless you work for Big Tech, but those people get $$$$$ severance packages and tend not to be unemployed for long).

21. The democrats hold the presidency and the Senate and a significant portion of the House and are holding the crazies in check… the only thing they couldn’t 100% control was a deal to push up the debt ceiling…

    Trump would have tried to fire the Fed chairman by now…

    Shareholders are pissed about the state of our “economy” and make comments like the economy was better for business under Trump.

    The election in 2024 will be interesting…

22. Two other things. The US slashed corporate taxes to the same level as the EU. And, due partially to the supply shock of Covid, there’s been a renewed and urgent focus on rebuilding American manufacturing. This guy is typically on target and he is certainly so on this video.

    ​

    https://www.youtube.com/watch?v=UNxkpqx1LDw

23. The US has a very robust and diverse economy, and we place a strong emphasis on innovation, entrepreneurship, and technological advancements. This has allowed our country to adapt quickly to the ever changing market demands and maintain a competitive edge globally.

    We also benefits from a position as a global economic powerhouse, with a huge domestic market and significant influence in international trade. This position in the world allows us to attract foreign direct investment, foster trade relationships, and benefit from a wide range of industries and sectors.

    Something that can be understated is us having a favorable business environment that encourages investment and growth. We have relatively low corporate tax rates, flexible labor markets, and a regulatory framework that promotes competition. These factors are very attractive to both domestic and foreign companies, stimulating job creation and economic. It’s ok to fail here. You can pick yourself up and try again.

    A lot of brilliant minds or hard working individuals from other nations choose to migrate to the US instead of contributing to their home countries, brain drain does occur. This hinders the development and economic progress of their home nations, as they lose out on skilled workers and potential innovators.

    A lot of the developed world is struggling with migrants and integration. Many foreigners mock race relations in the states but ignore how countries like Sweden and France are facing issues that have only just begun.. it drives away potential business minds and labor while pushing the problem down the road and allowing it to grow.

24. Bidenomics obviously

    Foreal though, I have no idea. We just built different over here.

25. we are invincible

26. We all know how to pull ourselves up by the bootstraps. Hehe

    God knows we’ve had to do it every other decade. 🙄

27. Largely because we are less regulated when it comes to the job market.

28. Covid fucked with the globalized economy but with the US is one of the most self sufficient countries on earth, if not the most, we weren’t effected as much. Only 13% of our economy is relies on imports, which is not the case for other developed nations, not even close.

29. Its because we are so big and we have a single authority that handles our macroeconomic policy.

30. The US has historically been very resilient. The fed has been very aggressive in tackling inflation and the Build Back Better act is providing a lot of stimulus.

    I think the biggest thing though is that the war in Ukraine is affecting Europe way more than it’s affecting us.

31. We can complain a lot about capitalism but something is true when is about economic recession the most free/unregulated the economy is the fastest can recover from crisis

32. The US dollar is the reserve currency of the world. Many other countries need to pay their debts in dollars. When we need to pay our debts we can just print more dollars. That means we simply can attack financial situations more directly that other countries.

    As far as why inflation is lower here it’s because JPow beat that recession into submission and then laid us down real nice and soft on a plush bed spread.

    Also, we have the tools to restrict money flow while also having the financial and capital markets that know how to deal with restricted money flow. Less money flow means less inflation. Competent financial markets means they handle it well.

33. It’s long and complex. We obviously have much natural economic resilience because of the resources, territory, political power, etc. we have. But I’m gonna focus on this aspect:

    Our politicians and policy makers are actually are making the correct moves for once. Americans will do the right thing once they’ve tried everything else first. We seem to be good at reacting to emergencies rather than with foresight…

    Fiscal stimuli from both Trump and Biden administrations were tremendously positive during COVID. The CHIPS act. The Infrastructure Act. Inflation Reduction Act. Student loan relief. These were huge investments from the federal government into the economy. Unlike ’09 when we saw subpar recovery, we practiced demand side economics this time rather than just supply side. Instead of the money disappearing into the void that is the financial sector where they manipulate money and it ends up becoming an increasingly large web of financial instruments, the money ended up in the hands of all sorts of folks across the economy. The money in the hands of people has had a [multiplier](https://www.investopedia.com/terms/m/multipliereffect.asp) effect as people spend and invest the dollars.

    Unfortunately this was a contributor to inflation when paired with the supply chain shortages. Low supply (from shortages) and high demand (peeps wanna spend their dollar) = higher prices of goods. Not to mention that during COVID we were not exactly in the best financial position to *deploy* a financial stimulus. Interest rates were low as hell and taxes too. Ideally your nation saves (higher tax and interest rates) in an economic boom so it has wiggle room to provide relief in a bust. We had no wiggle room; which added to the inflation. If interest rates were appropriately higher under Obama and Trump as they should’ve been we could’ve lowered them when COVID hit. The initial money supply would have been smaller so we could’ve expanded it more without as much inflationary pressures. But unfortunately a decade of easy money + supply chain issues made our fiscal stimulus more inflationary than it might’ve been.

    But overall… It was worth it for most. Obviously if you’re living off TANF or SSI you might disagree. But business owners and workers are doing great and are able to eat a lot more pie right now if they put a bit of effort in.

    We were successful at keeping money moving and we are in the best job market of my adult life. I’d love to be a college graduate now. The # of postings I see that I qualify for in UPSTATE NY is insane. And the fucking pay is so much higher.

    Despite the Fed’s flaws, the quasi governmental nature of the institution has been a strength and has allowed for *mostly sound* monetary policy in the end. Keeping interest rates perpetually low AF from 09 until this year was a mistake. But they ended up making up for it by their recent monetary policy response that somehow has wrangled in inflation but has not nerfed the job market with it.

    I also hypothesize that some of this is psychological too. Americans have a resilient attitude especially after COVID. News of economic disaster can be a self fulfilling prophecy where people prepare by spending less and therefore end up causing the recession. I think most Americans have a “fuck it” attitude and are just carrying on as normal after what we collectively experienced since 2020.

    Having a United country under a single currency also really benefits the US. New York doesn’t mind subsidizing Mississippi because we are all Americans. We might bicker but ultimately the topic of wealth transfer between states through federal expenditure isn’t a political issue and this creates a stronger economy. This is not the case in Europe. Germans do not want to subsidize the Greeks. And it leads to policies of austerity. Short term thinking that ultimately harms the entire economic zone in the long term…

    It’s a complex topic with a lot of moving parts. Hopefully someone found this insightful.

    There was a thread on Bidenomics. People laughed the term off because the economy right now is held back by inflation. But I think in retrospect this might be a calculated political move by the President that ends up benefiting him; the forecast looks very good right and Biden wants to attach his name to it before the fact. Of course if we do see that recession he just dug his own grave.