The Indicator from Planet Money
Why the US economy is still the envy of the world
Dec 14, 2024
Simon Rabinovitch, an Economist for The Economist, discusses why the U.S. economy thrives despite global challenges. He highlights structural advantages like productivity, business dynamism, and technological progress. The Great Shale Revolution's impact on stability is explored, showing how wages in underserved areas can outperform those in developed nations. Rabinovitch also examines the dominance of the U.S. stock market and the dollar's global status, revealing facets that contribute to America's economic strength amidst potential risks from political shifts.
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Quick takeaways
- The U.S. economy's remarkable productivity growth, driven by a dynamic business environment and rapid technology adoption, starkly outpaces that of similar developed countries.
- The U.S. dominance in oil and natural gas production has insulated it from global energy price shocks, enhancing economic resilience and stability.
Deep dives
U.S. Economic Productivity Growth
Productivity is a major factor driving the U.S. economic outperformance compared to other wealthy nations. Since 1990, U.S. productivity per worker has increased by about 70%, while similar countries have seen increases of only 40% to 50%. This trend can be attributed to several factors including a dynamic business environment that facilitates both company failures and new startups, significant investments in technology and research, and a strong ability to adopt innovative technologies rapidly. As a result, the U.S. has a large productivity advantage that translates into higher average wages for its workers, even in states considered economically disadvantaged.
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