- Despite flagging views of the economy, America’s recovery is stronger than others — by a lot.
- The US is the only member of the G7 group of rich nations to have a larger economy now than before the pandemic.
- America passed much more stimulus during the crisis than other advanced economies, making the recovery bigger.
Americans aren’t too happy about the country’s economic recovery. They should see the other guys.
Yet the average American thinks the economy is in the can. Consumer sentiment plunged to decade lows in November, with some even saying the current situation is worse than the depths of the Great Recession. Inflation is likely to blame. Prices rose in October at the fastest pace since 1990. While the country is healing, people aren’t liking the higher prices that have come with it.
Compared to other advanced economies, however, the US is in a league of its own. Preliminary gross-domestic-product readings for the third quarter show the US as the only G7 nation to surpass its pre-pandemic health, the Organisation for Economic Co-operation and Development said in a Thursday report.
The US’s recovery has been so strong, it’s played a significant role in lifting the world economy. Healthy third-quarter growth in the US, Korea, Israel, and some European countries led GDP in the 37-country OECD group to surpass its late 2019 levels by the end of September, according to the report. Just look at how far ahead the US is in GDP growth.
Still, the US rebound isn’t the boom it was just months ago. The national economy grew just 0.5% in the third quarter, down from the previous one-quarter increase of 1.6%. That was among the weaker gains of the OECD group and less than half the growth seen in peers including Italy, France, and Germany.
What $5 trillion looks like in the race to recovery
The discrepancy between the US and other nations’ recoveries comes down to money. While most advanced economies passed some form of stimulus to aid their economies earlier in the pandemic, US lawmakers flooded the country with unprecedented federal aid.
More than $5 trillion in fiscal support has been approved since the start of the pandemic between President Donald Trump and President Joe Biden, and hiring and spending have boomed as Biden oversaw a mass vaccination program.
Aid was doled out through direct payments, enhanced unemployment benefits, and forgivable loans for small businesses, among other items. Together, the stimulus packages helped drive record spending and left Americans with trillions of dollars in boosted household savings.
Japan’s fiscal response — which is widely estimated to be the third-largest — comes in at roughly $3 trillion.
To be sure, measuring aid in dollars alone misses key details. For one, many advanced economies had larger social safety nets than the US before the pandemic, meaning they had less to spend on aid once lockdowns began.
And while the US’s response is the largest by sheer price tag, it’s much closer to other countries when measured as a share of GDP. Singapore’s fiscal response is estimated to come in at 27.1% of its annual GDP, roughly the same as the US’s stimulus. Slovenia and Guyana follow close behind.
Regardless of the measure, the US enjoys a healthy lead in the global recovery. Americans may be annoyed with higher inflation, but the alternative might’ve been weak stimulus and a much slower rebound.