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Despite Trump's rancor for the global system, the world economy is surging

David Ignatius on

A final reason for optimism is Europe's recovery from its near-death experience of the past decade. The IMF attributes the revival to strong exports, solid domestic demand and "accommodative financial conditions amid diminished political risk and policy uncertainty." In other words, good policy and good luck. A recent blog posting by economist Simon Johnson was headlined: "A European Economic Miracle?"

The weak spot is Britain, which appears to be paying a steep price for its post-Brexit retreat from Europe. The IMF said growth will fall this year to 1.7 percent (the IMF was predicting 2 percent back in April) and to 1.5 percent next year.

Reading all this good news, there's a nagging sense that "we should not let a good recovery go to waste," as IMF Managing Director Christine Lagarde put it in a recent speech at Harvard. "Repair the roof while the sun is shining," she urged.

For the U.S., that means removing structural impediments to continued growth. U.S. companies aren't investing in new plants and equipment at the same levels as some Asian and European competitors, and few economists think that's because of high taxes. One telling statistic: The U.S. has been the worst at reducing inequality of all high-income countries, a recent Peterson Institute report noted. The new tax bill could make that problem worse.

Boosting U.S. demand by increasing workers' real wages would make this recovery as real and powerful at home as it seems to be abroad. If we're really talking about making America great again, rebuilding middle-class incomes is where to start.

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David Ignatius can be reached via Twitter: @IgnatiusPost.

(c) 2017, Washington Post Writers Group


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