Add monetary policy to the list of reasons why the U.S. economy stands out. Central banks in Canada, Sweden and the euro zone have all recently begun cutting interest rates. But the Federal Reserve again extended its monetary easing plans on June 12. Despite U.S. interest rates rising higher than in other large developed countries and inflation falling, the Fed's central rate setter expects to cut interest rates by just 0.25 percentage points this year. Some degree of monetary policy divergence is a natural consequence of strong U.S. growth. But what is increasingly striking about America's relative vitality is how vulnerable it is to the threats of political dysfunction and fiscal fragility that are major problems in the rest of the world.
The European Central Bank's latest forecast puts the euro zone's economy at 0.9% growth in 2024. The U.S. economy is currently growing at more than three times that rate, according to real-time estimates from the Federal Reserve Bank of Atlanta. China is struggling with a real estate crisis and the threat of deflation, Japan continues to defend a weak currency, and the U.K. has become a byword for abysmal productivity. The combination of strong growth and a strong dollar means that the U.S. share of world GDP at market exchange rates is rising, rather than falling as other countries catch up with the world's largest economy.
