At present, the economic development situation of countries around the world is not optimistic, and most developed and developing economies are facing the pressure of sluggish growth and increased risk of recession. However, in stark contrast to this trend, the U.S. economy has shown strong resilience and sustained growth. In the economic statistics for the first three quarters of 2023, the year-on-year growth rate of the US economy was as high as 25%, far more than other advanced economies. The emergence of this data seems to upend some of the speculations about the US recession. So why has the U.S. economy been able to maintain strong growth in the current global economic downturn? This article will analyze and elaborate on this issue from several aspects, such as assets and consumption, excess savings, investment and statistics.
Assets are the foundation of a country's economic development, and the assets of U.S. residents remain at a high level. According to statistics, as of June this year, the balance of deposits of American resident households and non-profit organizations was as high as 17786 trillion dollars. Excluding nonprofit deposits, U.S. resident households still have a savings balance of up to 17056 trillion US dollars, with per capita deposits of 5$110,000. This huge amount of deposits has undoubtedly become an important driving force for US economic growth. In particular, in the past few quarters, these funds have been pouring into the consumer market, becoming the biggest driver of economic growth in the United States. In addition, the excess savings accumulated by U.S. residents during the epidemic have also provided effective support for economic development. According to the San Francisco Fed, as of the end of September this year, the excess savings of American households were about $430 billion, and this saving phenomenon is expected to continue into the first half of 2024. This means that private consumption in the United States will remain highly dynamic in the coming quarters.
Investment is an important engine of economic development, and the same is true for the U.S. economy. In the third quarter of this year, the U.S. contributed 1.0 percent to gross domestic product (GDP) in terms of residential investment, equipment investment, intellectual property investment, and inventory investment82 percentage points, becoming the second largest supporting factor after private consumption. Although there are differences in the policy platforms of the previous United States, they have actively promoted the return of manufacturing to the local market, the consolidation of the security of the first chain, and the development of emerging industries. The investment expansion effect brought about by these measures has become an "important engine for supporting the development of the national economy" along with household consumption. In addition, the narrowing of the U.S. foreign trade deficit and the downward trend in inflation also provided strong support for economic growth. The combination of these factors has made the U.S. economy more resilient and has the potential to grow.
In addition to the support of factors such as assets and consumption, excess savings and investment, the U.S. Department of Commerce's revision of the statistical method of economic data has also provided some support for economic growth. By revising the "base year prices in the accounting process of the U.S. economy", the base of the U.S. economy has been raised, which in turn has increased the size of GDP. For example, in the 2022 amendment rules, the projected GDP size was increased from the initial 25$46 trillion raised to $25$744 trillion, equivalent to an upward revision of $281.4 billion. The impact of this correction on the size of the economy and inflation has strengthened the correlation between the real development of the US economy and official consumption and investment spending. Therefore, against this backdrop, the momentum of economic growth in the United States makes it difficult to believe that it is showing signs of recession.
In summary, the U.S. economy has maintained strong growth momentum in the current global economic downturn and is ahead of other advanced economies. This is mainly due to the high level of assets and consumption support of US residents, the positive effect of excess savings, and the strengthening of investment drivers. In addition, the U.S. Department of Commerce's revision of the statistical methodology of economic data has also provided some support for economic growth. As a result, the U.S. economy has not only grown above expectations, but has also demonstrated strong resilience and continued growth potential.
In my personal view, the reason why the US economy has been able to maintain strong growth in the context of the subversion of the recession theory is also inseparable from its internal institutions and market mechanisms. In the operation of the market economy, the United States has given full play to the role of the market and stimulated the creativity and vitality of enterprises and individuals. At the same time, sound laws and regulations and intellectual property protection measures have also promoted the continuous growth of innovation and investment. In addition, the United States has provided a strong guarantee for economic development through moderate macroeconomic regulation and control and flexible use of fiscal policy. In addition, the diversification of the U.S. economy and its position as the world's largest consumer market have also injected a steady stream of impetus into economic growth.
However, even if the U.S. economy is performing strongly at the moment, we cannot ignore the risks and challenges. Uncertainty in the global economy and geopolitical changes can have an impact on the development of the U.S. economy. In addition, the problems of wealth inequality caused by economic growth and environmental sustainability also need to be addressed and addressed. Therefore, while maintaining growth, the U.S. economy also needs to continue to carry out structural reforms and policy adjustments to achieve more stable and sustainable development.
In short, the reason why the U.S. economy has been able to maintain strong growth in the current global economic downturn is the result of a combination of factors. The U.S. economy has shown resilience and growth potential, supported by factors such as assets and consumption, excess savings, and investment, as well as the impact of statistical revisions. However, we should also be aware of the challenges and risks facing the U.S. economy, and need to remain vigilant and adjust in a timely manner in the course of development.