Why the U.S. recovery will be bigger, faster, and stronger than economists and politicians expect.

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Why the U.S. recovery will be bigger, faster, and stronger than economists and politicians expect.

You're Awesome, America!
Why the U.S. recovery will be bigger, faster, and stronger than economists and politicians expect.
By Daniel Gross
Posted Sunday, April 11, 2010, at 7:20 AM ET

In the wake of the 2008 financial meltdown and the deep, long recession that followed, the decline of America has become the preferred intellectual preoccupation of the elite—left, right, and center. Joseph Stiglitz, the Nobel-winning economist, has argued that the Obama administration's tepid response to the recession and the financial meltdown will sandbag the U.S. recovery. Historian Niall Ferguson has made the case that high debt and profligate spending will cause the downfall of a once mighty American empire. Harvard economist Ken Rogoff frets that the United States could become the next Greece. In January, French President Nicolas Sarkozy, once dubbed "l'Americain," delivered a blistering speech at the World Economic Forum in Davos that criticized the U.S.-led model of global capitalism.

After the failure of Lehman Bros. in September 2008, industries and institutions tethered to the easy-money era were sliced nearly in half. And so was America's economic self-esteem. Between the end of 2007 and the first quarter of 2009, $9 trillion of wealth evaporated. The relentless boom of China, India, and Brazil, with their cheap labor and abundant natural resources, emerged as a frightening new threat. The collapse coincided with other foreboding omens: $4-a-gallon gas, the rise of the Tea Partiers, an ungovernable Senate, an oddly blasé White House, unrepentant banks, and stubbornly high unemployment. The broad unemployment measure that also tallies frustrated part-timers and those who have given up looking for a job remains at 16.9 percent. If the United States doesn't tumble back into recession, the consensus holds, we'll face a Japan-style lost decade. A 2009 NBC/Wall Street Journal poll found that only 27 percent were confident their children's standard of living would be better than their own.

Bleak is the new black.

But the long-term decline of the U.S. economy has been greatly exaggerated. America is coming back stronger, better, and faster than nearly anyone expected—and faster than most of its international rivals. The Dow Jones industrial average, hovering near 11,000, is up 70 percent in the past year, and auto sales in the first quarter were up 16 percent from 2009. The economy added 162,000 jobs in March, including 17,000 in manufacturing. The dollar has gained strength, and the United States is back to its familiar position of lapping Europe and Japan in growth. Among large economies, only China, India, and Brazil are growing more rapidly than the United States—and they're doing so off a much smaller base. If the U.S. economy grows at a 3.6 percent rate this year, as Macroeconomic Advisers projects, it'll create $513 billion in new economic activity—equal to the GDP of Indonesia.

So what accounts for the pervasive gloom? Housing and large deficits remain serious problems. But most experts are overlooking America's true competitive advantages. The tale of the economy's remarkable turnaround is largely the story of swift reaction, a willingness to write off bad debts and restructure, and an embrace of efficiency—disciplines largely invented in the United States and at which it still excels. America still leads the world at processing failure, at latching on to new innovations and building them to scale quickly and profitably. "We are the most adaptive, inventive nation, and have proven quite resilient," says Richard Florida, sociologist and author of The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity. If these impulses are embraced more systematically and wholeheartedly, the United States can remain an economic superpower well into the current century.

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http://www.slate.com/id/2250374/pagenum/all/#p2