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That kind of adjustment--on personal, professional and corporate levels--is going on across the country. And it's one of the big reasons the U.S. is growing faster than nearly every other rich country, especially when there are still serious global economic headwinds, including high oil prices and a sovereign-debt crisis in the euro zone. The E.U. economy will likely shrink by 0.3% this year, and one of the key reasons is that Europeans haven't done nearly as much to unwind debt problems as Americans have. Indeed, the U.S. has brought its overall public- and private-debt level down faster than any other country since the financial crisis began.
That U.S. banks are rebounding while the European banking system is wounded and retrenching points to the fact that U.S. policymakers, unlike their European counterparts, actually learned the lessons of the Japanese banking crisis of the 1990s: you have to act swiftly and decisively to contain damage and allow the healing process to begin. TARP cost us more than $400 billion--all but $133 billion repaid--but four years later, we are in an expansion. The European Central Bank just shelled out $1.3 trillion in loans for the European financial system alone, but the continent is nowhere near the safety zone.
Driven by Automobiles
The revitalized U.S. auto industry resumed its traditional role as the shiny new model of recovery. Last year, auto-loan originations hit $289 billion, some 41% higher than in 2009. In Blue Springs, Miss., Toyota just added a shift to its plant to crank out more Corollas. Honda is pouring money into Ohio. In Belvidere, Ill., a postbailout Chrysler is adding 1,800 jobs to assemble its new Dart compact. According to the math of car manufacturing, each one of those jobs will create four others.
And plenty of the steel for those cars will be carried by the Union Pacific Railroad. "We thought it was going to be a slow start to the year, but autos are leading the pack for us right now," says Union Pacific CEO Jack Koraleski. UP will hire more than 4,000 people this year, a net of 1,200 new jobs. UP's energy business is also booming; it will double its carloads to and from energy-producing areas such as the Bakken shale belt in North Dakota and the Permian Basin in Texas. And UP is spending $3.6 billion on its infrastructure, including a new $400 million intermodal and fueling facility near Santa Teresa, N.M., that will help the company take advantage of an insourcing trend that is bringing some work back to the U.S.
Does all this reflect the sort of American economic exceptionalism that we liked to believe in before the financial crisis? In some ways, the answer is yes. Not only did our policymakers get certain things right, but also demographics and culture are in our favor. American workers are, on average, younger than workers elsewhere in the developed world, which helps a lot with growth, and both employees and employers tend to be more flexible and innovative--and thus quicker to take advantage of opportunities.