U.S. Economy Again Leads the World, IMF Says

International Monetary Fund upgrades U.S. growth outlook as strong investment boosts productivity

By Josh Mitchell of The WSJ. 

There is some good economic news out there. A related post was one from two weeks ago was A comparison of the inflation rates, unemployment rates and poverty rates from 1975-83 with the current rates. All three of those rates are much lower now.

Excerpts from The WSJ article:

"The U.S. is increasingly pulling ahead of the world’s advanced economies, with a surge of investment paying off in higher productivity and wages."

"The IMF projects U.S. gross domestic product to expand 2.5% in the fourth quarter from a year earlier—half a percentage point higher than a July forecast, which itself was an upgrade from a January estimate. U.S. output rose 3.2% in 2023.

That would be the fastest among the Group of Seven major advanced economies."

"Advanced economies as a whole are expected to expand 1.9% this year after growing 1.7% last year."

"The euro area’s economy is expected to grow 1.2% this year"

"The IMF attributed the latest boost in the U.S. outlook to higher nonresidential investment and stronger consumer spending, which is being supported by rising real, or inflation-adjusted, wages. Real wages tend to rise when productivity grows, because companies that become more efficient can pay their workers more.

Investor money has flooded the U.S. in recent years, while big legislative packages funded green energy and infrastructure. Meanwhile, abundant domestic supplies largely insulated U.S. companies from energy shortages and price shocks."

"Economists say that has all led to a surge in investment in the U.S., which boosts productivity—or output per hour worked."

"U.S. gross fixed capital formation—a broad measure of investment—will rise 4.5% this year from 2023, more than triple the rate for all advanced economies. From 2016-2025, the IMF estimates U.S. investment will have grown an average 3.3% a year, versus 2.3% for all advanced economies."

"In the prior decade, from 2006-2015, U.S. investment spending grew an average 1.2% a year, roughly in line with the advanced-economy average."

"In the 2010s the U.S. used new technologies such as fracking to increase domestic energy production. That itself boosted productivity—while also insulating the U.S. from global energy shocks."

"European Union companies are still paying two to three times more for electricity than U.S. firms, and four to five times more for natural gas"

"productivity gains by big U.S. companies are a primary reason why the U.S. and Europe have diverged in recent years."