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Pick your economy

Remember what Winston Churchill once said about democracy? It’s the worst form of government except for all the others that have been tried.

That dictum comes to mind when thinking about the U.S. economy these days. To many people, it could not be lousier. Yet compared to all the other economies around the globe, it doesn’t look so bad.

In fact, International Monetary Fund officials this week said the United States is one of the few bright spots on the world economic map. Europe, China, Japan, Latin American—all appear headed for slower growth, they said.

The IMF forecast for U.S. growth next year is more robust than any other major industrialized nation.

“In advanced economies, growth is forecast to rise to 1.8 percent in 2014 and 2.3 percent in 2015,” the IMF’s latest World Economic Outlook states. “Much of the projected strengthening in activity reflects faster growth in the United States following a temporary setback in the first quarter of this year.”

The projected U.S. growth rate next year is 3.1 percent, compared with 1.5 percent in Germany—typically Europe’s strongest economy—and 0.8 percent in Japan.

The IMF forecast was released a few days after the federal government reported that last month’s unemployment rate fell to 5.9 percent from 6.1 percent in August. The U.S. jobless rate last was that low six weeks before Lehman Brothers filed for bankruptcy in 2008 and the financial crisis threatened to spin out of control.

Also last month, U.S. employers added nearly 150,000 jobs—part of more than 10 million that the private sector has generated over the last four-and-a-half years, which is the longest stretch of job growth on record.

Then on Wednesday came more welcome news: the federal deficit has fallen to $486 billion, smaller than projected and down from $1.4 trillion in 2009.

All this is not to say that the U.S. economy is in perfect health. Its rate of expansion remains fairly modest by most standards, and too many people are underemployed or have dropped out of the labor force. And if major trading partners like the European Union slip into recession, maintaining solid growth here will be that much harder.

Still, look around. See any other economy you’d rather have?

10/10/14 (c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

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