The Next President Inherits a Remarkable Economy

The high quality of recent economic growth should put a wind at the back of the White House’s next occupant

By Greg Ip 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. 

Another one was Oct. 28. U.S. Economy Again Leads the World, IMF Says: International Monetary Fund upgrades U.S. growth outlook as strong investment boosts productivity.

Excerpts from The WSJ article:

"Through the second quarter, the U.S. grew 3%; none of the world’s next six largest advanced economies grew more than 1%."

"inflation has fallen in the past year, to 2.7% in the third quarter, using the Fed’s preferred underlying measure. That’s still above the Fed’s 2% target, but the progress was sufficient for the Fed to cut rates in September and pencil in more cuts"

"productivity—i.e., output per hour—probably rose around 2% or more, annualized, in the third quarter, after rising 2.7% in the prior four quarters, above the 1.5% average annual rate from 2007 to 2019."

"thanks to higher productivity, the U.S.’s potential growth—what it can sustain over the long run—might be higher than the 1.8% that many forecasters like the Fed have long assumed. 

Satyam Panday, an economist at S&P Global Ratings, thinks the potential might be 2% to 2.3%, citing booming investment in artificial intelligence, data centers, and renewable energy."

"no other country has witnessed it [Productivity trend]."

"from the end of 2019 to the end of 2023, total output rose 7.9% in the U.S., of which 1.2% came from more hours worked and 6.7% from productivity—more output per hour. In the eurozone, output was up 3% in the same period, entirely due to more hours."

"European Union companies still pay two to three times more for electricity and four to five times more for natural gas than their U.S. counterparts"

"No EU company worth more than 100 billion euros, equivalent to $108 billion, “has been set up from scratch in the last 50 years,” while all six U.S. companies worth more than $1.08 trillion were created in this period"

"America’s companies are also faster to adopt technology such as artificial intelligence, which explains much higher productivity in professional services, finance, insurance, and information technology services."

"These differences are mostly the product of the intrinsic dynamism of American capitalism"

"Average wages since mid-2023 have outpaced inflation as the latter fell."