The recent economic woes have been truly global–but the the U.S. has been, by far, the hardest hit economy as this new graphic by the Harvard Business Review suggests:
What you notice is that the U.S.’s financial interventions were indeed massive. The bank bailout came to 7% of GDP; the stimulus came to 35%. But considering that we were the cause of the financial malaise–and that our economy, more almost any other world power, was based on a real estate bubble–our response was fairly measured.
For example, bank bailouts in the U.K.–which had a similar, though smaller, consumer credit bubble–amounted to a whopping 20% of GDP. Meanwhile, China’s fiscal stimulus was an astounding 47% of GDP.
In that light, the bank bailouts really do seem to have worked, at a very nice price. (The banks are now largely stabilized and profitable. The unseemingly return of massive bank bonuses is another matter–speaking to how little the banks gave up to get the bailout funds.)
And the stimulus? While our unemployment figures do seem to be ticking upwards, the nonpartisan Congressional Budget Office thinks it has saved about 1.6 million jobs. A penny saved is a penny earned; likewise, a job saved is a job created.
The real worry suggested by the graph is what happens in the future: As our economy has stalled, others are better primed to focus their resources on igniting innovation and economic growth. And that, coincidentally, was the trust of President Obama’s State of the Union last night.