Opinion | Why the US is better placed to beat inflation than most other economies
- Today’s global inflationary surge is fuelled by a mix of domestic demand, supply chain disruptions and the effects of the Ukraine war on fuel prices
- The US is uniquely positioned to overcome this, owing to its relative energy independence, abundant immigrant labour and strong production capacity
These supply-side factors largely fall outside what the Fed can control. The US economy, however, is uniquely positioned to overcome this particular species of inflation, owing to its relative energy and food independence, abundance of immigrant labour, strong production capacity, and access to the capital needed to maintain and increase domestic manufacturing.
For example, it is less affected by soaring energy prices – a central driver of current inflation – because it is a net energy exporter. In 2021, US energy exports reached 25.2 quadrillion British thermal units (Btu), exceeding energy imports by about 3.8 quadrillion Btu.
And in the first half of 2022, it exported more liquefied natural gas than any other country. Europe, by contrast, imported roughly 58 per cent of the energy it consumed in 2020. In fact, all 27 members of the EU have been net importers of energy since 2013.
