Today two data releases for Gross Domestic Product were released. The first release was for the United States, giving us the third and “final” release for first quarter 2022 data. It was down 1.6% from the prior quarter (though we knew this two months ago — not much has changed since the “advance” estimate). That’s not good (but see this great Joseph Politano newsletter for some more detail).
The second release was the annual 2021 GDP data for the European Union. The release showed strong growth in 2021 (+5.4%), but that’s relative to the bad year of 2020. So compared to the pre-pandemic level of 2019, the EU was still about 0.8% below this more accurate baseline. Comparatively, the US was already 2% above 2019 with the annual 2021 release (everything in these two paragraphs is adjusted for inflation). Of course, within the EU, there is a lot of variation, but overall the US looks comparatively well.
Let’s break down that variation in the EU and include the first quarter of 2022 data to make the best comparison with the US. To bring in some more relevant comparison countries, I’ll use data from the OECD for a complete comparison. Note: I’ve excluded Ireland, because their GDP is weird. I’ve also excluded Turkey, because even though all the data here is adjusted for inflation, Turkey is in a highly inflationary environment, making the data a little difficult to interpret.
Here is the chart, which shows the change in real GDP from the 4th quarter of 2019 up through the 1st quarter of 2022 (I use the volume index, which is similar to adjusting for price inflation). I have highlighted in orange the largest economies in the OECD (anything with about $2 trillion of GDP or larger, with Spain and Canada at about that level).
Among large economies, the United States looks to have performed well during the pandemic. Yes, we are having a bad spell of inflation, but so are almost all countries. And even countries that have been mostly spared inflation (for now) like Japan have had lackluster economic performance: Japan’s economy is still smaller than pre-pandemic, as is Germany (third largest economy on this chart after the US and Japan). Though South Korea is clearly the best performer among large OECD countries.
This data only looks at past performance, of course. With the US and other countries starting to tighten monetary policy in response to inflation, it’s anyone’s guess (and there are lots of guesses!) what this data will look like in another 4 quarters. But overall, in my rough judgment, the US has not done too shabby in terms of economic performance (I probably wouldn’t say the exact same thing about the performance on COVID-19 itself, and of course the two aren’t unrelated).