The US Economy Is Still Thriving, with Big Development Potential

Recently, quite a few people worldwide have been watching the United States’ economic decline. The U.S. economy’s performance has been unsatisfactory in recent years, showing slow economic growth, high unemployment, weak income growth and cautious expansion of production. Some institutions even claim that the U.S. will more likely than not slip into another recession next year. Federal Reserve Chairman Ben Bernanke and other individuals and organizations have also expressed concerns about the economic recession. Could the U.S. economy truly be on the verge of dying?

Based on primary economic data, the U.S. economy began to recover in early 2009. In 2010, the gross domestic product growth rate was 4.2 percent. During the first three quarters of this year, the GDP continued to grow. Industrial production caused business inventories to rebound, while some companies’ profitability increased substantially. High technology is representative of a new, growing and powerful industry. Apple and Facebook, as well as other well-run high-tech companies, have recently seen gains of 60 percent. Fixed asset investments have seen modest growth, while there has been a rapid increase in the proportion of corporate liquidity totaling more than $20 trillion — the highest amount in half a century. Share premiums have also seen a 50-year high. The U.S. National Venture Capital Association report shows that U.S. venture capital investments increased by 19 percent in 2010 when compared to the previous year.

Although the U.S. government and its citizens are in over $60 trillion of debt, the U.S. has overseas assets worth more than $60 trillion, and foreign investments to the United States have brought high returns. At present, the U.S. financial system is operating normally, so there has been an increase in lending by banks, which gives small and medium-sized businesses a good advantage. With the financial markets in smooth operation, mergers and acquisitions continue to be active, the exchange rate is holding steady and the money supply is normal; thus, the outbreak of a systemic crisis is unlikely. Consumer confidence has also increased, with this year’s number of post-Thanksgiving shoppers expected to rise. And the number long-distance travelers will rise to 42.5 million people. Despite job growth being weak, it is still better than last year. Within the job market for high-end jobs, there is still a gap of more than 40,000 engineers.

Looking at all aspects of the data, the U.S. economic recovery is beginning to gain momentum and show signs of warming up. I have worked in Silicon Valley for more than half of a year, and I can feel economic vitality and see development everywhere. I cannot see any evidence of economic decline. The U.S. economy still faces some challenges, but as the world’s largest economy, families in the United States are still thriving, and there is considerable potential for development. In 2010, the United States accounted for 28 percent of the world’s total wealth. The United States’ position as the global financial leader has not faltered, and the hegemony of the U.S. dollar has not yet been shattered. In the areas of information, aerospace technology, biology, product development, new energy resources, innovation and new industries, the United States is still in a dominant position. People-oriented and diversified skills systems have attracted other countries’ talents toward U.S. business. The basis of the United States strength — social flexibility, adaptability and competitiveness — is something that cannot be matched

There is a lack of understanding of the history of the U.S. economy. Economic crises naturally occur within capitalism. Ever since 1825, when England had its first overproduction crisis, frequent economic crises have not lead to the destruction of the capitalist system. Rather, they have strengthened the capitalism’s self-improvement abilities. In the last century, America has experienced two major economic crises, yet it is back on the fast track to development. In 2007, sub-prime lending led to an economic crisis, but self-healing is still possible with capitalism. The United States can take advantage of technology, resources and manage its strengths to overcome the crisis effectively.

Of course, the U.S. economy currently has no small amount of problems. Some are deep-seated structural problems that cannot be solved overnight. If the United States genuinely wants to correct itself, it faces a principal contradiction. They are determined to solve their own problems, but they cannot simply blame the exchange rate, trade imbalances and other external causes.

The writer is a visiting scholar at Stanford University