One of the issues that has dominated the economic agenda in the United States is inflation, which has reached 7%, the highest level in 39 years.
In other countries (such as Argentina or Venezuela) it may seem like a normal level, but in the world’s largest economy it is a big problem.
Salaries have increased, but since the increase has been less than inflation, people feel it directly in their pockets, especially the most vulnerable families who spend a large part of their budget on basic needs.
The result is that life is more every day expensive as household consumption continues to rise, putting more pressure on global supply networks for products that were already bogged down by the effects of the pandemic.
Thus, a significant part of the population has money to spend, but there is not enough supply of products to satisfy demand.
But, beyond inflation, there are other economic indicators that show that things are not as bad as it seems.
This Friday, quite encouraging data was published: the economy added 467,000 jobs in January, a figure that exceeded the expectations of experts.
“It is quite extraordinary that despite the pandemic, the United States economy has done quite well,” economist Gian Maria Milesi-Ferretti, senior researcher at the Hutchins Center on Fiscal and Monetary Policy at the Brookings think tank, tells BBC Mundo. Institution, in Washington, D.C.
Taking a look at what’s going on with the economic growth, unemployment, poverty and consumption, the other side of the coin appears.
President Joe Biden has insisted that the policies implemented by his government – which include a large increase in public spending – have made it possible to cushion the blows of the pandemic, especially with regard to the growth of the Gross Domestic Product (GDP).
“My first year GDP numbers show that we are finally building the American economy for the 21st century,” he recently declared.
The Republican opposition, on the other hand, is not satisfied that public spending continues to grow, nor that the extraordinary fiscal aid that has been injecting money into the economy is maintained.
Here we present 4 figures that show the good state of the American economy:
1. High economic growth
Already in the third quarter of 2021, the US Gross Domestic Product (GDP) had exceeded the levels recorded before the pandemic. Household savings levels, workers’ average wages and, in general, consumption and domestic demand also increased.
This accelerated economic recovery is attributed, in part, to the policies and economic aid promoted by the Biden government, including the stimulus checks received by citizens, the reinforcement of unemployment aid and the Food Stamp Program, as well as tax aid for families with minor children.
These measures were included in the US$1.9 trillion economic stimulus plan (American Bailout Act) approved by Congress and enacted by Biden in March 2021.
“The economy has had a better performance when compared to other developed countries“, like those of the so-called G7, which also includes Canada, France, Germany, Italy, Japan and the United Kingdom, argues Milesi-Ferretti.
“When analyzing the trend, if we had not had the pandemic, growth would not be much higher either,” he points out.
In figures, the increase in GDP in 2021 was 5,7% (the highest level in 37 years), while the economic growth of 2019 (before the pandemic) was 2.2%.
That came after the US suffered a spectacular 3.4% contraction in 2020 – when the pandemic triggered a global recession – the worst drop since the end of World War II.
2. Decrease in unemployment
end of 2021 unemployment went down en EE.UU. from 6.4% to 3,9%, the largest drop in unemployment in the same year in the history of the country.
Before the start of the pandemic, in February 2020, unemployment was at 3.5%, that is, not so far from the current level.
In the last two years, the labor market has experienced some problems, such as the decrease in the workforce and the shortage of employees, although in the midst of the difficulties, the economy has managed to recover almost 19 million of the 22 million lost due to the pandemic. .
3. Poverty reduction
Another indicator that shows the good health of the US economy is the decrease in poverty.
Thanks to the support of tax aid, the most vulnerable families managed to withstand the effects of the pandemic on the economy.
Although official statistics from the Census Bureau for 2021 are not yet available, a team of experts from the Center on Poverty and Social Policy of the columbia university, projected that poverty would have reached about one 12.6% last year.
Compared to 10.5% in 2019, the last year without a pandemic, it is seen that the situation did not escalate to levels that are difficult to control, as it did in other countries.
In the US, a family of four – two adults and two children – is considered to live below the poverty line if their income is less than $27,000 a year.
The case of child poverty, which in December reached 12.1%, according to estimates by the Columbia University team, is quite surprising.
The usual thing is that poverty affects children more but, if the projection of Columbia University is confirmed, the effectiveness of the fiscal aid delivered in 2021 directly to families with children would be demonstrated.
What experts warn is that, as many of the benefits delivered in recent months are coming to an end, child poverty is likely to increase.
4. Increased consumption
Consumer spending in 2021 is estimated to have reached US$47.528per capita, a higher level than in 2019, when it was $43,919.
“Consumption has done very well in a difficult time,” says Milesi-Ferretti.
In addition, it has undergone a turnaround, he adds, because Americans are buying more goods than services.
Both consumption and private investment have been recovering despite the new wave of the omicron variant.
JPMorgan and Bank of America banks reported that household finances are technically in a better position than before the pandemic.
Now, some economists have warned that those savings that many were able to accumulate during the pandemic have begun to diminish.
Looking ahead, US economic growth will be around 4%, according to estimates by the International Monetary Fund (IMF).
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eldiariony.com
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.