Comparing the US recovery to the global financial recession...
...the US has stacked up very favorably.
This is worth noting, I think. It's easy, and reasonable, to criticize the current administration for the sluggish recovery. Compared to other American recessions in modern history, this one has been the slowest, which is nothing to be thrilled about.
But this recession is fundamentally different. The bubble was bigger, it was based in housing on which the entire economy was built, and it took a decade to get there as opposed to past bubbles which took a hyperinflation occurred on a shorter timeline.
While two recessions can never be the same, perhaps our recovery to the 2009 global recession is best compared to every other country's over the same timeline. They've all dealt with the same basic issues we've dealt with, even though they didn't have to cough up the hundreds of billions Americans did to fend off the crisis. Even with that anchor around our neck, I've read repeatedly that the US's recovery is among the strongest recoveries.
China's weakening, Europe's slagged well behind us (with the exception of Germany, who's had the single best recovery so far), Japan lags behind us and China is struggling so much they have started depending on us. American manufacturing is extremely well set up for future production compared to our allies.
Even if you don't want to make this comparison yourself, it does offer some context. The recession we suffered in 2009 was global and spectacular, hitting every developed nation on earth. Our recovery has been amongst the strongest.
The US bright spot
Oct 22 09:33
It seems odd — and it may well be short-lived — but the US is beginning to shape up as a rare bright spot in the world economy.* Or indeed almost the only bright spot in the world’s economy, except for the Gulf petro-states. That is, if you were to base such an assessment solely on Japan’s September export data, released on Monday.
Japan’s preliminary September trade data tell a story not dissimilar to China’s — exports to Europe are slowing (unsurprisingly) by a lot, down 26 per cent for the month, year-on-year. Asian exports also fell, by 8.3 per cent. But US exports rose 0.9 per cent. The six months between April and September show a more striking contrast: exports to North America rose 16.6 per cent; while for Asia they fell 4.7 per cent and for Western Europe, there was a 20.8 per cent decline.
Of course a month or even a few months’ data on one particular bilateral trade flow is not huge proof of anything, and there is likely at least some kind of seasonal effect for September, as Standard Chartered pointed out with regard to China’s September exports to the US. Plus there are the considerable effects of last year’s tsunami and the strong yen — although these would apply to every export destination.
However, the fact is that the US is growing, albeit very slowly, while Europe in aggregate isn’t, and China is in the throes of a somewhat confusing growth deceleration.
It all works — particularly if you discount the risk of the fiscal cliff.
*Actually perhaps it’s not that odd. The FT’s Martin Wolf made a comment along these lines in Sydney last week. Plus, Cardiff has been looking at (very) tentative signs of an upturn in housing and construction for some time now, and that was before Jamie Dimon picked up on it.
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