For US, This Is As Good As It Gets

Why another dominant decade for America is so unlikely

- Ruchir Sharma

Driven by the success of America’s vaccine rollout and massive government stimulus, the US economy is expected to grow as fast as 7% this year and is currently leading the world recovery. The commentariat was talking up an “American Renaissance” as the nation celebrated the 245th anniversary of its independence on Sunday.

But there is a problem: America just went through an economic renaissance. It’s not likely to be reborn again.

A decade ago, in the wake of the 2008 financial crisis, Standard and Poor’s downgraded US government debt for the first time ever, triggering dire forecasts of American decline. Instead, the 2010s saw an expansion of American economic power, driven by its tech prowess and its relatively quick resolution of the debt crisis.

The US share of global GDP rose from a 2011 low of 21% to 25% last year. Average incomes started the decade 26% higher in the US than in Europe and finished more than 60% higher. The US income lead over Japan grew even more dramatically. By early 2020, despite talk of “despair” in the jobless middle classes, US consumer and small business confidence hit highs unsurpassed since the 1960s. Unemployment fell to 50-year lows.

As a financial superpower, the US reached even greater heights. Its stock market rose 250%, far outpacing all rivals over the course of the decade, and its share of global stock markets increased from 42% to 58%. The US dollar emerged more dominant than ever, helping the US extend its lead over other developed nations.