The recovery of the U.S. economy from its coronavirus-driven downturn has been, we think, remarkable. Consider that the unemployment rate has fallen from a peak of 14.8% to 5.8%; weekly jobless claims have fallen from a peak of 6.1 million to 385,000; and total employment has jumped 14 million jobs from a pandemic-driven low of 130 million to 144 million (if there is a weak spot in the economic recovery story, it is the number of Americans that remain out of the workforce, something we wrote about in last week’s Weekly Wire). Additionally, gross domestic product (GDP) is back to, if not slightly above, its pre-pandemic peak at $22 trillion and the economy this year should grow – per the estimate of the Federal Reserve – 6.5%.
While much work remains on the economic front, we are living through a period of historic growth, and for that we are very grateful, particularly when one considers that the performance of our economy relative to every other major economy is atypical. More specifically, according to the Organization for Economic Cooperation and Development, the U.S. is the only major economy in which expectations for 2025 GDP among leading economists are higher today than in January of 2020. Said differently, the pandemic-driven downturn should leave every other economy smaller than they should have been in four years time, some dramatically so.
If we had to point to two factors that have put the U.S. in this enviable economic position, they would be the dramatic fiscal and monetary policy response to the downturn (our ability to print the world’s reserve currency is indeed an exorbitant privilege) and the incredible progress made vaccinating our citizenry. Fifty percent of Americans have received at least one vaccine dose, while the vaccination rate for the world is 11%.
Tagged: Tim Holland, weekly wire, market perspectives, U.S. economic growth