America … And The Rest

Nov 19 2012 @ 11:30am

It's funny how this has not really sunk in with most Americans, and was not an argument that featured much in the campaign, but the recovery in America has been far better in the US than anywhere else in the West. Why the Obama peeps didn't make more of this is beyond me. But there's no question, for example, that the British Tory approach to debt and growth has not succeeded as well as Obama's (although the US, of course, has the ace of a global reserve currency):

111712krugman1-blog480

Ryan Avent looks ahead:

The really distressing thing is to try and project these lines forward a bit. Japan is in recession. Britain may be out of it, but on the other hand may not. The euro zone has Usnot grown for over a year, is almost certainly contracting faster in the fourth quarter than it did in the third and may well continue shrinking into 2013. One wonders whether the euro zone has already had the best quarterly output performance it will ever manage.

And then there is America, trudging steadily upward to the beat of its own drummer. How long can the divergence between America and the rest persist? And on what terms will these lines cross again?

One thing seems reasonably clear: America will not be able to rely on demand from the rest of this bunch to keep its line going up. Most of all, it will have to count on the durability of domestic demand. 

Paul Krugman admires the periwinkle line as well, noting that the "across-the-board poor performance puts the lie to claims that it’s all because of that scary Obama person." His backward-looking read on the differing trajectories of recovery:

What accounts for the differences? The most obvious culprit is austerity, which has been much more marked in Europe and the UK than in the US…. And this means that much of the advanced world blithely repeated the mistakes of the 1930s.