Weakness in Europe Makes the Case for the US Economy

Economic Temperature Check

It has been a turbulent few years for the U.S. economy, with the pandemic-era recession and historically high unemployment, which gave way to a roaring rebound, a worker shortage, and high inflation.

The whiplash of the past years have created what economists call a k-shaped, or bifurcated, economy that doesn’t serve all Americans equally well. Some made it through the pandemic and the subsequent period of high inflation unscathed. Other households have been struggling for years to make ends meet.

There’s no doubt that some things are going wrong in our economy. Even so, America’s European peers are looking across the Atlantic for a blueprint of success that can jumpstart their ailing economies.

The World’s Benchmark

The American economy is effectively the benchmark for the rest of the world, according to a report from Italy’s former Prime Minister and economist Mario Draghi.

America’s. private sector still leads the way in terms of productivity and innovation. Of the 10 largest digital platforms serving E.U. citizens, the majority (six) are owned by the U.S., while none were launched by European nations.

The U.S. is also home to 22 of the 50 companies with the biggest research and development budgets globally, per an Axios analysis of the report, which continues to drive innovation. That’s not to say Europe’s private sector is entirely falling apart. In fact, it has grown every month in the half year leading up to August. But that’s not quite enough to shake the overall economic fragility of the E.U. stemming from a slowdown in orders, business confidence, and employment, according to a separate report by S&P Global .

Another key difference between the U.S. and European economy is the labor force. While European nations, including its biggest economies Germany and Italy, are struggling with aging populations that weigh on the availability and cost of labor, the U.S. population and workforce are growing.

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