What’s Happening in the World: USA

By Tully Moss

The United States is a rich country that enjoys a number of strategic advantages: world-class universities, a highly innovative society, the world’s reserve currency, a robust capital market that has considerable depth and sophistication, a formidable military that has global reach, nation neighbors for which it is on peaceful terms, an efficient agricultural industry that produces an abundance of food, considerable natural resources such as oil and natural gas, and allies with which it collaborates on global initiatives.

For being the world’s largest economy, the United States’ gross domestic product (GDP) has been growing at a reasonable pace: from 2015 to 2021, the growth rate averaged approximately 2.1 percent. Productivity had been declining (from 3 percent during the Clinton presidency to 2.4 percent during George W. Bush’s presidency to 1.2 percent during Obama’s presidency) but picked up slightly during Donald Trump’s presidency to 1.4 percent, and it was 2.1 percent in October of 2021 (during the Biden administration). Again, for an economy of its size, two percent annual productivity improvement is a solid performance. Unemployment was at a historic low of 3.7 percent in 2019, rose dramatically to 8.1 percent in during pandemic-year 2020, and is projected to end at 6.1 percent in 2021.

Although the U.S. has considerable strengths and an economy that has been performing reasonably well, it is also confronted with potentially existential threats, both internal and external to the country: a bitterly divisive political environment at home, severe threats from major powers abroad, and an economy built on debt and consumption rather than savings and investment. As a wealthy nation, the U.S. has approximately $90 trillion in assets — which it is basically selling off in order to consume.

This consumption orientation shows up in the nation’s current account: in 2020 the U.S. current account showed a cash deficit with the rest of the world at $616 billion. The deficit is particularly glaring in goods, where the U.S. had a deficit of nearly $1 trillion. Offsetting some of the net deficit in goods is a surplus in services, which amounted to $245 billion in 2020. A strong dollar, tax cuts, and stimulus programs — as well as a consumption culture — have fueled consumer purchases, especially of foreign goods.

In addition to the current account deficit, there is a fiscal deficit, which amounted to a whopping 14.9 percent of GDP in pandemic-year 2020 (it had ranged between roughly three to five percent during the latter half of the 2010’s). U.S. federal debt has skyrocketed from approximately 20 percent of GDP in 1980 to north of 120 percent of GDP in 2020.

U.S. consumption and debt has essentially been funded by foreign nations, especially Asian nations, where there tends to be a savings glut.

The sustainability of the United States’ current account deficit, fiscal deficit, and high levels of federal debt is questionable. Asia essentially has been providing the U.S. with the funds to consume goods manufactured in Asia. For the time being, it works. But it is an asymmetrical world: nations such as the U.S. consume more than they produce while Asian nations produce more than they consume…and effectively fund the consumption of countries such as the United States.

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About the author:

Tully is well-versed in Harvard’s approach to business education. He has led numerous executive education programs utilizing Harvard Business Publishing materials and has taught over one thousand Asian managers and executives. He has been trained at Harvard Business School, having completed Parts I and II of Harvard’s Art & Craft of Discussion Leadership course. His facilitation work has covered issues such as leadership, innovation, marketing, change management, corporate strategy, and digital disruption.

Tully has close ties to Harvard: he is a moderator for Harvard Business Publishing, and he co-authored a Harvard Business School case study on the Philippines, entitled, “The Republic of the Philippines: The Next Asian Tiger?”

Tully brings to his facilitation work a rich perspective developed from over thirty years of management consulting. He has consulted in a broad array of services and manufacturing industries on issues such as business unit strategy, marketing strategy, organizational effectiveness, and mergers and acquisitions. He is skilled at improving go-to-market effectiveness through fact-based assessments of market positions, segmentation opportunities, value propositions, and sales and distribution channel opportunities. He also has experience in developing process improvements and change management programs. He has authored thought pieces on high performance companies, market trends in Asia, and mergers and acquisitions.

In addition to leading case study discussions, Tully is an accomplished coach. He has been certified by the International Coach Federation, and, for 360-degree assessments, has been certified by both Zenger Folkman and The Leadership Circle.

He has extensive experience consulting in North America, Europe, and Asia. His clients have included Fortune Global 500 corporations as well as small and medium-sized enterprises.

Tully received his MBA from the University of Pennsylvania’s Wharton School of Finance and his bachelors, with honors, from Williams College. After graduating from Williams, he taught at a college in Hong Kong under a YALI grant.