One of the most striking developments over the past year has been the extraordinary resilience of the US economy, despite the highest interest rates in a generation. The United States grew 2.5% last year, much faster than any other advanced economy, and by all indications continues to outperform in early 2024. Several elements lie behind this strength. First and foremost, the US government is running an astronomical budget deficit, which amounted to more than 6% of GDP last year. This enormous public spending has shielded economic growth, but has also raised concerns about debt sustainability. In contrast, most ... (full story)