According to reports, the US economy has been performing far better than other countries.
Despite the fact that the United States did not respond to the pandemic crisis as other countries, the economy appears to be performing better. Moreover, with over 13.8 million reported cases, the US is the most affected country globally by the pandemic. The unemployment rate of the country is also worse than various developed economies.
The economy has been performing better because of the large fiscal stimulus package that was released earlier this year in the spring. Moreover, the United States is not dependent on a single industry that might be suffering because of the pandemic, whereas that is the case with other countries; for example, Spain relies on tourism.
According to the World Bank, the United States also does not depend on exports which amount to only 12% of the country’s GDP.
Meanwhile, other countries are highly dependent on this such as Germany’s exports account for 47% of the GDP. Hence these countries are suffering more than the United States because of hindrances in global trade due to the pandemic.
According to Mark Zandy of Moody’s Analytics, in these highly unpredictable conditions, the US economy tends to suck in global capital flows. This is because America is responsible for printing the global currency reserve. This results in the asset values of the country increasing and the borrowing cost decreasing.
He proceeds to explain that the labor market of the United States is capable of adapting to big change more easily, because the American people are more flexible and show a willingness to adopt new technologies. Moreover, the US citizens don’t shy away from taking big steps like moving for a job and changing how they live.
Moreover, the Federal Reserve has also played a role in helping the economy through this crisis by contributing to the financial markets with special programs. In addition to this, interest rates were also reduced to zero.
Democrats, together with Republicans, released a fiscal stimulus called CARES Act, which was worth $2.2 trillion. Through this package, they provided loans to small businesses, $1200 checks to American households, gig-workers were also covered in the unemployment-insurance system and $600 was given as unemployment checks every week.
According to Moody’s Analytics, this federal support amounted to approximately 12% of the country’s GDP, which was twice more than the UK and one-third more than Germany.