Recovery in the U.S.

Several days away from the first anniversary of his election to the White House, President Barack Obama could not have dreamed of a lovelier present. With the announcement on Thursday, 29 October, of a 3.5 percent increase in the annual GDP for the third quarter, the United States is officially out of the longest recession phase since the Great Depression. The worst has therefore been avoided. That is to say, precisely, that we have avoided the economic catastrophe of the 1930s, when the decrease in activity persisted for nearly four years.

If history was not repeated, it is first of all because the tragic economic and monetary policy mistakes committed at that time have not been reproduced. Contrary to the restrictive and deflationary strategies enacted at that time, the government decided this time on a revival plan of unprecedented magnitude ($787 billion) while the Federal Reserve lowered its key interest rate to zero percent.

This drastic response has apparently fully succeeded, proving yet again that America’s ability to manage crises is as great as its inability to prevent them. This success will allow the leading world economy to get out of the recession in a more robust manner than anticipated; even stronger than Europe, where revival plans have been more faint-hearted.

But looking at it a little closer, the details of the upturn observed in the third quarter in the United States is as much a harbinger of concern as of hope. What will happen when the exceptional measures of government aid, such as the cash for clunkers in the automobile sector, disappear? Alone, this last detail accounts for half of the 3.5 percent increase in GDP. Will the private sector manage to take over?

The second troubling element is that it is essentially thanks to household consumption and residential investment that the economic machine has picked up across the Atlantic. In other words, the two items that were the cause of all the excesses that led to the crash of 2008 in the first place. This is to say that Americans have not given up the bad habits of their addiction to credit (their debt increased again by $2.5 billion!), living beyond their means, spending too much and not saving enough. It is, however, at the expense of such changes that the American economy will achieve stability and permanently contribute to worldwide growth.