Solid growth, big deficits and a strong dollar stir memories of past crises Greg Ip trade deficit
This year, the U.S. will account for 26.3% of the global gross domestic product A caveat: These figures are based on current prices and exchange rates. Using purchasing power parity, which adjusts for different price levels across countries, the U.S. share of world GDP would be lower and that of big emerging markets—such as China and India—much higher. But you don’t pay for oil, iPhones or artillery shells at purchasing-power parity. Current prices and exchange rates better capture a country’s relative economic power. U.S. wages (adjusted for inflation) are roughly level with just before the pandemic, whereas they are lower in other advanced economies, the IMF found. The second, more worrisome, reason for stronger U.S. growth is government borrowing—including former President Donald Trump’s 2018 tax cut, bipartisan Covid-19 relief in 2020 and President Biden’s 2021 stimulus. In fact, Washington continues to inject stimulus, albeit not with that label: hundreds of billions of dollars