“The 2020s have opened with the sudden shock of a global pandemic. Economists are downgrading their growth forecasts for countries all over the world, and the United States’ record-long economic expansion is at risk of coming to an abrupt end,” writes Ruchir Sharma, chief global strategist at Morgan Stanley Investment Management. “But there is little evidence to suggest that the downturn will hit the United States disproportionately hard.”  

Sharma observes that “It is hard to find any member of the U.S. foreign policy establishment who does not believe that the United States is in decline and that the waning of its influence has accelerated under a president who seems to revel in attacking U.S. allies and enemies alike.” He argues that “The United States is not in decline. It was the comeback nation of the 2010s. And if the experts aren’t right about where the United States is coming from, they may not be right about where it needs to go.”  

“Declinists take as a given that the U.S. share of global economic output has been decreasing for decades and that the United States has either already lost its status as the world’s largest economy to China or is fated to lose it within the next ten to 15 years,” he writes. However, “The United States is the battle-tested survivor of 12 recessions and a Great Depression over the last century. China has not suffered a recession since its economic boom began four decades ago, and its leaders now respond to any hint of a downturn by pumping more debt into the economy.” 

While the prevailing pessimism survived a surge in American financial might over the last decade, Sharma shows that “During the 2010s, the United States not only staged a comeback as an economic superpower but reached new heights as a financial empire, driven by its relatively young population, its open door to immigration, and investment pouring into Silicon Valley.” 

“Lifted by the strong performance of American technology companies, the U.S. stock market rose by 250 percent in the 2010s, nearly four times the average gain in other national stock markets,” he writes. “By 2019, the United States accounted for 56 percent of global stock market capitalization, up from 42 percent in 2010. The value of the U.S. stock market, relative to all others, was at a 100-year high before the novel coronavirus hit and maintained this historic lead in the subsequent initial market crash.” 

Furthermore, “Having the indispensable currency also gives the United States tremendous geopolitical leverage,” Sharma maintains. “Close to 90 percent of global financial transactions conducted through banks use the dollar, even if the deal does not involve an American party.” And “Because the U.S. Federal Reserve controls the supply of dollars, it is, now more than ever, the world’s central bank.” 

“In a polarized age, Americans tend to see economic reality through a partisan lens. The Democratic presidential candidates have dwelled on themes of decline and stagnation,” Sharma observes. “Fear of the coronavirus will reshape the 2020 election conversation, but again, there is no evidence yet that the pandemic will depress the economy or economic confidence in the United States more than in other major powers. The underlying question now is, will the U.S. economy rule the 2020s the way it ruled the 2010s, with or without the virus?” 


This article is part of the May/June issue of Foreign Affairs, which will be released in full on April 16. 

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