The US economy grew by about 3%, exceeding expectations (Getty)

The Economist magazine said that the American economy emerged as characterized by flexibility, economic strength, and the ability to defy pessimistic expectations.

The magazine highlighted the "exceptional performance" of the American economy, marveling at its ability not only to withstand storms, but also to thrive amidst challenges.

Exceeding expectations...a year of growth

At the end of 2023, the US economy grew at a rate of about 3%, exceeding expectations and leaving behind the specter of recession that was haunting analysts.

In contrast to previous expectations of modest growth, the first quarter of this year witnessed a doubling of the expected annual growth rate, which paints a picture of strong economic activity.

One of the pillars supporting this economic activity was the flexibility of the labor market, and with unemployment rates falling steadily to less than 4% over a period of 25 months, the American economy enjoyed a period of sustained growth in employment that had not been seen in more than half a century.

According to The Economist, this “exceptional” performance surprised analysts who were in a state of uncertainty against the backdrop of global economic challenges and geopolitical uncertainties.

The magazine emphasizes the prowess of the American economy compared to other major economies. Since the end of 2019, the American economy has grown by approximately 8% in real terms, leaving behind the Eurozone and Japan by a large margin.

Since the end of 2019, the US economy has grown by approximately 8% in real terms (Reuters)

Obstacles on the road

The Economist points out that the path, of course, is not without obstacles. Despite its flexibility, the American economy faces looming threats that are likely to derail its impressive path.

Continued high interest rates pose a risk, as does persistent inflation, which has remained above the Fed's 2% target, and geopolitical tensions are further complicating the outlook, with potential implications for global trade and economic stability.

The newspaper says that the upcoming presidential elections may be the most important threat on the horizon, and neither candidate Joe Biden nor Donald Trump inspires confidence in sponsoring the continued economic expansion, and instead their proposed policies raise concerns about jeopardizing the hard-won gains of recent years. To danger.

Strength and flexibility

According to the magazine, one of the decisive factors in America's economic success was proactive fiscal measures, especially the generous stimulus packages during the pandemic, which amounted to 26% of GDP.

Although these measures fueled inflation, they also ensured rapid growth, as consumers had not yet exhausted the cash flow from government aid. However, the sustainability of this stimulus-driven growth is increasingly coming into question, especially as debt interest payments threaten to exceed national defense spending.

The magazine highlights the significant role of immigrants in the growth of the labor force in America, as waves of immigration have contributed to providing a vital source of labor in an economy characterized by flexibility and the ability to adapt.

However, The Economist warned against over-reliance on these factors, which may not be sustainable in the long term.

At the end of 2023, the US economy grew at a rate of about 3%, exceeding expectations and leaving behind the specter of recession (Shutterstock)

Modern protectionism

The magazine points out that the looming specter of protectionism - which was embodied in the policies called for by both Biden and Trump - poses a serious threat to America's economic future.

While Trump's proposed tariffs and immigration restrictions threaten to disrupt supply chains and inflate costs, Biden's penchant for economic nationalism threatens to stifle innovation and undermine free market principles.

In the face of such challenges, The Economist warns against misplaced nostalgia and misguided interference, stressing that America's economic success was driven by creativity, adaptability, and free market dynamics, not by heavy-handed government policies or protectionist measures, and failure to acknowledge this fact would risk To jeopardize the foundations of the country's economic prosperity.

The magazine concluded that the real test lies in whether the next administration will adhere to the principles that pushed America to the economic summit or will succumb to the temptation of short-term reforms and populist rhetoric.

Source: Economist