The U.S. economy is outpacing China and Europe. Foreign companies are investing in the United States. Unemployment is expected to be the lowest in 7 decades early next year. The only downside we are facing right now is global inflation. Our ports are busier than the rest of the world because Americans actually have cash to spend due to wages being up.
Life isn't too bad right now considering we are handling getting back on track better than anyone else.
The force of the American expansion is inducing overseas companies to invest in the U.S., betting that the growth is still accelerating and will outpace other major economies.
www.wsj.com
FRANKFURT—A booming U.S. economy is rippling around the world, leaving global supply chains struggling to keep up and pushing up prices.
The force of the American expansion is also inducing overseas companies to invest in the U.S., betting that the growth is still accelerating and will outpace other major economies.
U.S. consumers, flush with trillions of dollars of fiscal stimulus, are snapping up manufactured goods and scarce materials.
U.S. economic output is set to expand by more than 7% annualized in the final three months of the year, up from about 2% in the previous quarter, according to early output estimates published by the Federal Reserve Bank of Atlanta. That compares with expected annualized growth of about 2% in the eurozone and 4% in China for the fourth quarter, according to JPMorgan Chase.
Major U.S. ports are processing almost one-fifth more container volume this year than they did in 2019, even as volumes at major European ports like Hamburg and Rotterdam are roughly flat or lag behind 2019 levels. The busiest U.S. container ports are leaping ahead of their counterparts in Asia and Europe in global rankings as volumes surge, according to shipping data provider Alphaliner.
In Europe, “durable goods consumption is showing nothing like the boom that is ongoing in the United States,” said Fabio Panetta, who sits on the European Central Bank’s six-member executive board, in a speech last month. Consumption of durable goods has surged about 45% above 2018 levels in the U.S., but is up only about 2% in the eurozone, according to ECB data.
Factory gate prices in China are far outpacing consumer prices, signaling a gulf between weak domestic demand and strong overseas demand that is powered in particular by U.S. hunger for China’s manufactured goods.
While tangled global supply chains also play a role in driving global inflation, economists and central bankers are increasingly pointing to ultrastrong U.S. demand as a root cause.
“Are we crowding out consumers in other countries? Probably,” said Aneta Markowska, chief financial economist at Jefferies in New York. “The U.S. consumer has a lot more purchasing power as a result of fiscal policy than consumers elsewhere. Europe could be in a stagflationary scenario next year as a consequence.”
The U.S. accounts for almost nine-tenths of the roughly 22-percentage-point surge in demand for durable goods among major advanced economies since the end of 2019, according to data from the Bank of England.
“Very strong U.S. demand is certainly where [global supply bottlenecks] started,” said Lars Mikael Jensen, head of network at container ship giant A.P. Moller-Maersk A/S.
“It’s like a queue on a highway. The increase in volume in the U.S…takes ships away from other markets,” said Mr. Jensen. “Problems in one place will trigger problems somewhere else, we live in a global world.”
The U.S. economy will likely grow by around 6% in 2021 and 4% or more in 2022, the highest rates for decades, analysts say. Strong U.S. growth momentum is expected to push the unemployment rate to the lowest level in almost seven decades by 2023, according to Deutsche Bank analysts.
U.S. economic output is likely to surpass its pre-pandemic path early next year, while output in China and emerging markets will remain about 2% below that path through 2023, according to JPMorgan Chase.
U.S. wages are growing by about 4% a year, above the precrisis trend rate, compared with less than 1% growth in the eurozone, according to data from the Bank for International Settlements, a Switzerland-based bank for central banks.
“We threw a lot of support at [the economy] and what’s coming out now is really strong growth, really strong demand, high incomes and all that kind of thing,” said Federal Reserve Chairman Jerome Powell after the central bank’s recent meeting. “People will judge in 25 years whether we overdid it or not.”
