With the world economy slated to grow around 6 percent this year according to Oxford Economics, the U.S. could play a central role, The Wall Street Journal (WSJ) reports.
That more central role in the global comeback would be in contrast to the U.S. recovery from the 2008 financial crisis.
WSJ writes that this shows the “unusual nature” of COVID-19 compared to past crises, and how flexible the American economy is.
Some of the ingredients propelling the likely growth include the rollouts of vaccines, the recently-passed $1.9 trillion aid package, easy money from the Federal Reserve and pent-up savings, as American households are sitting on around $1.8 trillion in savings over the past year.
The U.S.’s expected larger role would be the first time since 2005 that the country is expected to make a larger contribution to global growth than China. China powered the economic growth in the wake of the 2008 crisis, with the U.S. experiencing the slowest growth since the Great Depression.
But because the U.S. economy is around a third larger than China’s, the recovery is expected to be larger if they both grow roughly at the same rate, which analysts say is likely.
The U.S. contracted 3.5 percent last year and is expected to grow 7 percent this year, while China grew 2.3 percent last year and is expected to grow 8 percent this year, reports from Goldman Sachs say.
According to economists with J.P. Morgan, the U.S. could surpass its pre-crisis trend growth rate by the middle of the year. China, they say, has already gotten back to the pre-pandemic trajectory but won’t exceed it.
The presence of the digital economy could help soften the blow, though, Karen Webster wrote a year ago as the pandemic was just beginning. The increase in things like live-streaming, gaming apps and eCommerce all helped to keep the world going amid the presence of the virus.