5 reasons why the US economy is still the top in the world
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5 reasons why the US economy is still the top in the world

Europe is still staggered, China’s growth is slowing, and Japan is also struggling to maintain its recent achievements.

Besides, after negative growth of 2.9% in the first quarter, mainly due to severe weather, US GDP is forecast to increase by 3% until the end of the year.

US stocks have continuously set records recently.

1. Strong central bank

`The US Federal Reserve (FED) has acted faster and more aggressively than other banks in keeping interest rates low,` commented Bernard Baumohl – chief economist of Economic Outlook Group.

Meanwhile, the European Central Bank (ECB) is slow in responding to the economic slowdown in 18 euro zone countries.

The Fed has two goals: stabilizing prices and improving the job market.

2. Banks are healthier

The US is further ahead than Europe in the process of recovering the banking industry after the crisis.

Meanwhile, European banks perform stress testing later.

In the US, bank credit has increased by 4% in the past year.

3. The economy is more flexible

Economists say Japan, Europe and China need to reform to make their economies more flexible, like the US.

Europe needs to remove wage restrictions, to help companies reduce wages (instead of layoffs) when facing difficulties.

Japanese Prime Minister Shinzo Abe’s proposals aim to increase the competitiveness of the Japanese economy, such as expanding child care programs so women can work, and replacing inefficient small farms with small farms.

Meanwhile, China is also struggling with the transition to growth based on consumption, instead of exports and investment.

`Japan and Europe have only recently begun to address the root problems. So they still have a lot of work to do,` commented Eswar Prasad – Professor at Cornell University.

4. Fewer budget cuts

The burden of public debt has caused many European countries to choose to tighten their belts by reducing pensions, increasing taxes and reducing civil servant salaries.

5. The stock market prospered

The FED’s loose monetary policy has caused US stocks to continuously increase recently.

This is also one of Mr. Bernanke’s goals when lowering interest rates.

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