Why the USA is an economic superpower that is pulling ahead of everyone else

Only he can “make the USA great again,” he promises Donald Trump relentlessly – the country is currently in “decline” is the gloomy message from the Republican presidential candidate.

The opposite is true – when it comes to the economic power of the USA. In recent years, the USA has left the rest of the rich world behind: today it generates by far largest economy in the world already half of that BIP of the G-7 states (i.e. the seven richest industrial nations), in 1990 it was only two fifths.

Particularly die I will leave the United States behind in the future. According to the latest data from the International Monetary Fund, the annual growth rate in the EU will average only 1.45 percent between 2020 and 2029 – but that of the USA will be a significantly higher 2.29 percent.

Himself Chinawhich just a few years ago was expected to overtake the USA as the world’s No. 1 economic superpower in a few years, can currently only watch from second place as the USA pulls away.

After the pandemic

One of the reasons why the USA is enjoying such economic success is due to its “very good management of the pandemic and the subsequent phase,” says Laura from DanielsUS expert at the Science and Politics Foundation (SWP): “A triad of emergency aid, an infrastructure law and the Inflation Reduction ACT”. This boosted growth and consumer activity and kept employment high; at the same time, “important long-term decisions” were set.

The negative effect is that inflation shot up, but is now back to 2.4 percent. It’s “amazing,” says von Daniels, how “well we succeeded in simultaneously stimulating growth on the one hand and getting the inflationary consequences back under control on the other.”

But probably the most crucial reason why the USA will remain the largest economic power in the next few years lies in a combination of many factors: high investments, a dynamic private sector, excellent research, Internet giants, leadership in artificial intelligence, little political regulation , much higher productivity than most other countries, but also immigration and favorable demographics: a lower birth rate and a slower aging average population than, for example, Europe or China.

High national debt

Not even the USA’s extremely high level of debt threatens its economic supremacy: the US debt ratio is currently 121 percent – i.e. the ratio of national debt to nominal gross domestic product (Austria is currently 79 percent).

“The USA can afford more debt than any other country,” says expert Laura von Daniels, “yet many investors are pushing into the US market and lending money to the government in Washington. That gives the government a lot of room for maneuver.”

Daniels also currently gives little chance to the BRICS states’ desire to create a kind of counter-currency to the dollar, which dominates everything: the economic foundations for this are currently lacking.

As much as the American economic engine is purring, both Donald Trump and Kamala Harris always have their most important competitor – China – in sight. “Really important instruments that the US has developed in recent years are export controls,” says Laura von Daniels. In particular, the export of sensitive technology has been restricted, i.e. technology that can be used for both military and civilian purposes. “The US government’s goal is to help prevent even more American cutting-edge technology from potentially being used for military purposes in China and then possibly being directed against the USA.”

A law is also being prepared that will require American investments in China to be registered with the US Treasury Department in the future. This, in turn, could significantly slow down the flow of US investment from the USA to China.

Both Harris and Trump – both presidential candidates – can be expected to bring out tougher economic weapons and laws against Beijing. With the same goal: the USA must remain the number 1 economic power.