Quite like an Olympic sport, hand-wringing about "America's decline" is popular, practiced all around the world, and often dominated by Americans, themselves. Unlike an Olympic event, it's wasted energy.
Usain Bolt is the most dominant sprinter the world has seen in a century, perhaps more, so when he runs at the London games, anything less than victory by a blistering margin will be greeted as a disappointment. Results are always relative to expectations, and this as true for global economic competition as for the 100-meter dash. These days, the United States is an underestimated underdog, while China is still widely seen as something more like Bolt. The expectations gap is crucial to parsing the confused public discussion of the American recovery, and what it means for America's future.
Since the crisis of 2008, most Americans have come to expect gloom rather than gold in the near future. The long-term US growth rate is now burdened by our huge debts, and is slowing to 2.5 percent, down from 3.4 percent between 1950 and 2007. This fall is stoking a premature sense that American preeminence is already over. Polls show that a majority of Americans think China is already the world's "leading" economy, even though it is still about one third the size of the U.S. economy. The reality is that, at 2.5 percent growth, the US remains the fastest-growing rich economy, and is in fact regaining some of the recent ground lost to newcomers like China.
America's performance should be measured against the current competition, not against the records it set in the 1990s or 2000s.
America's performance should be measured against the current competition, not against the records it set in the 1990s or 2000s. All the big emerging markets are slowing, most notably China, which has lowered its growth target to under 8 percent for the first time in many years and may well fall under 7 percent. It is hard to grow at a sprinter's pace when you are hitting middle age, growing careful and a bit fat. China is all three, having recently reached an average real income of more than $5,000, with a total GDP of more than $7 trillion, and a new taste for welfare state programs. Every "miracle economy," from Japan in the 1970s to South Korea in the 1990s, slowed at this real income level.