The major global economic centers are fragile. An analysis with economist and philosopher Florent Machabert. For different reasons, the United States, Germany, and China need support for their respective growth. The uncertainty of geopolitical factors adds to the difficulties.

The major global economic centers are fragile. An analysis with economist and philosopher Florent Machabert. For different reasons, the United States, Germany, and China need support for their respective growth. The uncertainty of geopolitical factors adds to the difficulties.

In his annual speech at Jackson Hole, Federal Reserve Chairman Jerome Powell assessed the post-pandemic U.S. economy and hinted that rate cuts may soon take place. Is this enough to revive the U.S. economy?

Two main factors explain the resilience of the U.S. economy: the first, structural, comes from the great flexibility of the U.S. labor market, which explains the very rapid return to full employment after the COVID crisis, despite the fact that it had doubled the unemployment rate. The second, circumstantial, stems from the proxy war that Washington is waging—and losing—against Moscow via the Ukrainian front. This conflict has indeed served as a pretext for the U.S. to significantly weaken the European continent, notably by depriving it—Germany in particular—of cheap Russian energy resources (oil, gas). Worse: Joe Biden simultaneously implemented his "Inflation Reduction Act" (IRA), which involved subsidizing the relocation of European industrial flagships to U.S. soil, while boosting U.S. energy supply to Europe, particularly LNG, 60% of which is now exported from the U.S. to the EU. And that's without mentioning the U.S. "military-industrial complex" (Lockheed Martin, RTX, Northrop, etc.), which is obviously also profiting from the situation. In this context, the fact that the Federal Reserve is beginning to "inflate" again is not a very structuring decision: Powell is merely trying to reduce the gap with the European key interest rate, which the ECB lowered for the first time last June, in order to support a weakening dollar against the euro. But, once again, the U.S. is burdened with $35 trillion in public debt, in a context where the candidates for dedollarization, led by the BRICS+, are growing in number and determination each year...

Germany remains anchored to the constitutional mechanism that limits the annual structural deficit to 0.35% of GDP. This mechanism, criticized by many economists, is it stifling German growth?

Just because there has been recent talk of abandoning the famous German "debt brake" doesn't mean this measure is bad! On the contrary: this almost "golden rule" of the budget, combined with the Hartz reforms (while Ms. Aubry, meanwhile, concocted the "35-hour workweek"), explains why Germany has managed to maintain twin surpluses, both in its trade balance (helped by the euro, of course, which was tailor-made for it) and in its budget balance! Remember, during the legislative elections, G. Attal proposed his own "golden rule": a ban on tax increases! It was demagogic and absurd, the goal being to evade the only issue that matters: reducing public spending. Passing a balanced budget, as before 1974, is again a prerequisite to escape the debt trap closing in on us, meaning having an annual GDP growth rate higher than the rate at which France borrows.

It's simple, right?

But not very electoral.

Youth unemployment in China is at record levels. Is the Chinese economic model running out of steam?

China is Confucian: the long term matters more to it than short-term turbulence. However, it is true that the sluggish evolution of Chinese consumption, combined on the one hand with the "controlled demolition" by the CCP of part of the real estate bubble to clean up the sector, and on the other hand with growing mismatches in the labor market between overqualified young people and basic jobs, has pushed youth unemployment above 14%. But beyond these factors, China has a deeper problem: brilliant in the "Ricardian" phase of its takeoff, where growth was synonymous with building all types of infrastructure, it is now at a critical juncture and faces significant difficulties in the "Schumpeterian" phase of its development, where it needs to create, invent, discover, and innovate—all tasks where the Indo-Oceanic world could very well outshine it.