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“ON PRESENT policies and performance, the United States is condemned to slower growth than the other main industrial countries for the foreseeable future.” So declared the Competitiveness Policy Council, a committee advising America’s president and Congress, in 1992, a time when America was gripped by concerns that its economy was declining and losing ground to Japan and Europe. The opposite turned out to be true. Japan entered a long period of stagnation, Europe’s growth fizzled and America experienced a mini-boom, fuelled by the rise of the internet.
More than three decades later, some are again painting pictures of an American economy heading towards decline. China is now the rising juggernaut in the East. Donald Trump, instead of Bill Clinton, is the candidate for president lamenting the state of the economy (Mr Trump says it is “failing”, where Mr Clinton called it an “unpleasant economy stuck somewhere between Germany and Sri Lanka”). Ordinary Americans are anxious. Gallup, a polling firm, regularly asks Americans if they are satisfied with how things are going. From 1980 until the early 2000s, a little more than 40%, on average, said they were. Over the past two decades that has dropped to 25%.
Are the prophets of decline onto something this time? Since the rollicking 1990s the American economy has suffered occasional upheavals, including the dot-com bust, the global financial crisis, a spike in unemployment during the covid-19 pandemic and, most recently, a surge in inflation. In purchasing-power-parity (PPP) terms America’s share of the global economy has indeed shrunk, from 21% in 1990 to 16% now.
But one thing has been consistent since the early 1990s: America has grown faster than other big rich countries, and it has rebounded more strongly from bumps along the way. The faulty diagnosis of the competitiveness council back in 1992 should stand as a corrective for those now peddling gloom. America’s growth since then has been best-in-class, and its strengths today give grounds for optimism about the country’s economic power and potential. That America’s share of global...