The U.S. economy’s resurgence reflects a resilience that other powers can only dream about
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Fourteen years after it was struck in the head and seven after being kicked in the stomach, the U.S. is ready to stage an economic, political and social comeback.
Economic indicators unambiguously signal the approach of an American year.
In China, decades of breakneck growth are coming to an end, as economists, including its own government, expect the economy to slow to 7% in 2015. Three decades after it grew by 19.5% in one year (1984), an era of economic transformation, momentum and optimism is drawing to a close.
In Japan, new stimulus packages, including an ambitious plan for the central bank to buy $700 billion in financial assets, only highlight endemic economic ailments. The national debt is more than twice the size of the economy, the worst among the world’s developed economies. GDP contracted by almost 2% last quarter.
In Europe, the eurozone’s seasonally adjusted unemployment rate is 11.5%, including nearly 3.5 million jobless in France alone. With 2015 growth forecast at about 1%, the EU’s labor crisis can be expected to look in 12 months the way it looks today: a chronic disease highlighted by 14 million jobseekers up to age 29 alone. With Germany, Europe’s economic locomotive, having grown in 2014 by an estimated 1.4%, and with its central bank expecting 2015 growth to slow to 0.8%, the European economy is in for a lackluster year, at best.
And what about the major-league basket cases that sprawl to the EU’s east, where the ruble is entering 2015 worth barely half its value a year ago, while GDP is forecast to shrink by 4% in Russia and by 4.3% in Ukraine.
The U.S. economy is back in the saddle — some of it is about cyclical trends, but most of it is about structural differences and political advantages.
None of this awaits the U.S. economy.
The U.S. labor market is near full employment, with joblessness possibly dropping in 2015 even under its current 5.8%, while GDP expands by a robust 3%. The budget deficit, while still a deep $483 billion, has nonetheless declined to a fraction of the $1.4 trillion at which it peaked in 2009, and is now 2.8% of GDP, as opposed to the 3.2% annual average since 1980. Reflecting those symptoms of recovery, the dollar is again the world’s strongest currency, 3 1/2 years after the U.S.’s credit rating was downgraded for the first time ever.
Back in the saddle
The U.S. economy, in short, is back in the saddle, and the question is why? Well, some of this is about cyclical trends, but most of it is about structural differences and political advantages.
One structural difference is evident in the oil market. With the exception of several energy corporations, the U.S. economy stands to gain from the drop in oil prices as factories’ operation costs fall and households’ available incomes rise. While this applies also to China, Japan and Europe, it does not apply to Russia, whose quest to rival the U.S. economically has now become even more fictional than it was before its oil revenues plunged.
Yet even more crucially, the U.S. economy depends a lot less than others on foreign trade.
Whereas Japan, China and Germany export, respectively, 15%, 24% and 41% of their GDP, the U.S. exports 9.4%. And whereas those three import 15.5%, 21% and 33% of their GDP, the U.S. imports a mere 7% of its GDP.
Americans, in other words, buy and sell mainly among themselves. Consequently, the U.S. economy is relatively immune to its trade partners’ tribulations, while all other industrialized economies, from Taiwan to Israel, are affected profoundly by changing conditions in their export destinations. Similarly, while others must import raw materials, the U.S. has much of what it needs at home.
Moreover, Germany, while opening the spigots at its end of the gas pipe, must worry about the political caprice at the pipe’s Russian end, just like the Japanese and Chinese, while buying the Middle East’s oil must consider its perennial turbulence.
U.S. trade, by contrast, is dominated by eventless Canada, where the U.S. buys about a fifth of its imports. The closest the U.S. comes to a volatile trading partner is Venezuela, the 13th-largest source of U.S. imports.
Other people’s problems
This is all abroad, but the U.S. economy is ahead of its rivals also in terms of what is happening at home.
Yes, the U.S. has social problems, as reflected in recent police-brutality incidents and in the struggles surrounding illegal immigration. Yet the U.S. economy faces no challenge like Europe’s unassimilated Muslim immigrants, no predicament like the insolvent economies that threaten the EU’s survival, and no scourge like the neo-fascist reaction that is rearing its head from Sweden to Greece.
The U.S. faces no challenge like China’s Hong Kong, a thorn in Beijing’s authoritarian side whose pricking will only hurt more as the Asian giant expands. And the U.S. faces no challenges like Japan’s demographic decline and ethnic uniformity.
Instead, the U.S. balances economic vitality, commercial security, national unity, political freedom and ethnic diversity in a way that none of its geopolitical partners and rivals can match. This gap will become evident in 2015, when talk of America’s geopolitical decline that followed 9/11, and talk of its economic decline following the 2008 meltdown, will give way to the realization that eulogies of Uncle Sam’s global leadership were premature.
For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at info@buysellflbiz.com or 239.738.6227. Also, visit our Florida Business Exchange website at www.fbxbrokers.com and my personal website at www.buysellflbiz.com.
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