💥 America’s ‘exceptional’ post-pandemic economy

'The US has been exceptional in its ability to generate a complete post-pandemic recovery.' More to come?

This US versus EU GDP chart has gotten quite a bit of play recently on social media:

While the chart is directionally accurate, it overstates the US lead and how much that lead has grown in recent years:

That said, here’s the important economic reality embedded within the above charts: The American economy has outperformed other major economies post-pandemic, exceeding pre-pandemic growth projections despite rocketing prices and severe monetary tightening.

This economic record contrasts sharply with slower recoveries elsewhere, especially in Western Europe, marking the US as uniquely resilient. Now I get why some might object to this characterization given the economic chaos of 2020 and the subsequent inflation and interest rate surges. But the story of American outperformance is explained at length in “Neo-exceptionalism and the policy rate path,” a new analysis from the JP Morgan economic and policy research team led by Bruce Kasman.

From that report:

Although inflation and central bank behavior were broadly synchronized, post-pandemic growth recoveries were not closely aligned. The US stands out as the only large economy in which GDP has risen faster than our estimated 2019 potential growth rate path would have anticipated. The gap between US and RoW growth, reflected in the cumulative forecast revisions of our economists, is particularly striking when compared to Western Europe (Figure 1). As this gap has continued to widen, the US has been deemed exceptional in its ability to generate a complete post-pandemic recovery in the face of large negative supply shocks and substantial monetary tightening.”

Especially encouraging: Supply-side factors have been a key component of American economic exceptionalism in the post-pandemic recovery. This isn’t just a demand-driven story.