A forecast in an article by Britain-based financial analytics firm Oxford Economics says that a robust US economic recovery this year will boost manufacturing, agriculture and retail sectors around the world.
The report says that demand for goods and services this year is expected to spread beyond US borders and the United States will become the largest contributor to global economic growth for the first time since 2005, displacing China, at least for now. , in a global economy of 90 trillion dollars.
The article argues that the vaccination campaign, President Joe Biden’s spending program, and low interest rates from the Federal Reserve, are fueling a national economic explosion that will lift up other countries where their governments have not responded aggressively to the pandemic of coronavirus.
Friday’s report from the Labor Department reflected the creation of 916,000 jobs in March and the unemployment rate that has fallen to 6%.
In contrast, economic recovery in Europe is stalled by a new wave of coronavirus cases that forced France last week to issue its third national lockdown and partial restrictions in Italy and Germany.
According to Oxford Economics, most economists expect China’s growth to rise this year at a higher rate than in the United States, but since the US $ 21 trillion economy is still much larger than China’s, measured in dollars, the US contribution to global growth would be greater as well.
The article also warns of potential pitfalls, such as a resurgence in inflation and the fact that more than 8 million jobs lost during the pandemic have yet to be recovered.
During the Great Recession of 2007-2009, an intense debate about increasing the fiscal deficit affected stimulus spending and left the US contribution well below what is forecast for this year, says Oxford Economics.
Biden last week unveiled an ambitious $ 2 trillion infrastructure plan designed to rebuild the US economy.
The proposal must be put to a vote in both houses of Congress and Biden will need the support of the Republican opposition to achieve the qualified majority necessary to pass his bill.
For now, the proposal has already received criticism from Republican lawmakers, with Senate opposition leader Mitch McConnell saying he will likely oppose the legislation.
McConnell added that the project includes “more borrowed money and massive tax increases in all productive parts of our economy.”