Why Europe Should Not Worry About US Out-Performance

Summary:

The US outperformed Europe on economic growth from 2010. Some of this can be explained by self-inflicted wounds and austerity politics in Europe, notably during the eurozone crisis, but there are also clear, structural advantages that the US has benefited from. With a demographic tailwind relative to Europe, an abundant and cheap energy supply, and a looser budget policy, US out-performance should come as no surprise. But the rapid growth in shale oil and gas production is largely overand the US will not be able to run an expansive fiscal policy forever.

European policy-makers can take some consolation in good productivity growth and are already taking steps to address Europe’s energy crisis. In many countries, governments are seeking to raise immigration to tackle demographic problems. But Europe must also avoid repeating the mistakes of the eurozone crisis and austerity era: if new self-inflicted wounds can be avoided Europe need not fret too much about its underperformance vis-a-vis the US.

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ESO Records

European Economy: Institutional Papers: Nov. 2023: European Economic Forecast. Autumn 2023 https://www.europeansources.info/record/european-economic-forecast-autumn-2023/

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