The US Has the No. 1 Economy — Why That’s a Bad Sign
Written by
Heather Altamirano
Edited by
T. Woods
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The last few years have been uncertain for Americans, with the pandemic, trade wars, societal division, political instability and inflation. Despite these major issues, the U.S. has acheived the No. 1 economy.
According to data from the International Monetary Fund, the United States has the best economy in the world, with China and Germany following behind. The U.S. gross domestic product (GDP) stands at 28,783, with China’s at 18,536 and Germany’s at 4,730. “This year, the U.S. will account for 26.3% of the global gross domestic product, the highest in almost two decades,” the Wall Street Journal reported.
That doesn’t mean there isn’t trouble ahead. Economic growth has been faster than other countries and Americans have benefited from “the price of what it exports, notably natural gas, has risen more than the price of what itimports,” per the WSJ.
However, there is reason for concern — government borrowing. Former President Donald Trump‘s 2018 tax cut, bipartisan COVID-19 relief in 2020 and President Biden’s 2021 stimulus did strengthen the economy, but some believe at a cost.
“U.S. deficits have run roughly 2% of GDP higher than the IMF expected back in late 2022. They will be the highest, by far, among major advanced economies forthe foreseeable future,” according to the WSJ.
The outlet reported that “in the long run, deficits inflate future interest bills and crowd out private investment. But they might be leading to dangerous imbalances right now. Deficits were justified when unemployment was high, private demand moribund and inflation and interest rates low. None of that is true now.”
Yet as Biden continues to push for student loan debt relief and aid to Ukraine, Taiwan and Israel, “the IMF thinks core inflation (which excludes food and energy) is a half percentage point higher than otherwise would be because of fiscal policy,” according to the WSJ.
Another issue to keep an eye on is the rise of the dollar. “The strong dollar might destabilize the international economy another way: through protectionism,” per the WSJ. “The result will almost certainly be more protectionist pressure. Biden is already planning higher tariffs on China. If Trump returns to the White House, expect no action on the deficit and, if his first term is a harbinger, more tariffs and a push to weaken the dollar.”
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