The world is starting 2024 on an optimistic economic note, as inflation fades globally and growth remains more resilient than many forecasters had expected. Yet one country stands out for its surprising strength: the United States.
After a sharp pop in prices rocked the world in 2021 and 2022 — fueled by supply chain breakdowns tied to the pandemic, then oil and food price spikes related to Russia’s invasion of Ukraine — many nations are now watching inflation recede. And that is happening without the painful recessions that many economists had expected as central banks raised interest rates to bring inflation under control.
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Part of the reason that economic growth has been so surprisingly strong in the United States is simple: The American government has continued to spend a lot of money.
Government expenditures as a share of overall output hovered around 35 percent in America in the years leading up to the pandemic, based on I.M.F. data. But in 2020 and 2021, they jumped above 40 percent as the government responded to the coronavirus with about $5 trillion in relief and stimulus to people, businesses, institutions, and state and local governments.
Both states and households have only slowly spent down the savings they amassed during those pandemic years, so the money has continued to trickle through the economy like a slow-release booster shot. On top of that, government spending has remained elevated as the Biden administration has begun to make sweeping infrastructure and climate investments.
These are statements that are literally almost always true. Prices always rise by design and there are always some companies going through hard times and paying people off.
Maybe you have an argument that it’s “unsustainable” and there is no doubt that the previous period of inflation is still putting massive pressure on people’s finances, but at the same time the outlook is good for the economy.
It might be tough to hear that because you are struggling, but you are not the economy, and where you are right now is not necessarily where you’ll be down the road in a year.
I mean prices of many food items have risen way faster than the rate of inflation within the past couple years.
A grocery run that was once $100 in 2020 is now $150 or more today.
Meanwhile household debt is sky rocketing because those families can’t afford their necessities anymore and have little recourse but to put it on credit cards.
Meanwhile families are hitting the streets at record levels while layoffs are happening across the board.
Meanwhile tent cities are popping up all over the country at levels never seen before in the last 50 years.
Sick take bro /s