In 2025, the mainstream Keynesian narrative that the United States would inevitably experience a recession and stagflation has proven to be utterly incorrect. The American economy is performing much better than its comparable nations, is showing broad-based strength, and even has indications of accelerating growth, giving investors and consumers plenty of reason to feel more optimistic, despite the consensus estimates from earlier in the year.

The consensus was wrong.

The United States economy is outperforming the economies of the UK, Germany, France, Italy, Japan, and the entire euro area, showing estimates of economic growth that exceed those of the best-performing developed nations, along with significantly lower unemployment rates and solid real wage growth.

Both the recent spike in inflation and the current decline in US jobs are, in a very significant way, the fault of the Federal Reserve.

The Fed’s policies since 2021 reveal a nightmare “pendulum” effect: first, easy money and historic liquidity expansion fueled runaway inflation; then, rapid rate hikes hurt businesses and families as well as job creation, especially for small and medium-sized businesses and families. In 2021, the largest monetary expansion in decades caused an inflationary burst that was particularly negative for wage earners and small businesses. A massive rate hike exacerbated this negative impact.

The French debt crisis reminds us that gradualism never works, that statism always ends in ruin and that those countries that bet on more government and higher taxes always end in stagnation, risk of default and social unrest. France’s government debt-to-GDP exceeds 114%. However, unfunded committed pension liabilities reach 400% of GDP, according to Eurostat.

The fiscal deficit announced for this year is 5.4%, but market consensus maintains an expectation of 5.8%. The five-year credit default risk has risen by 20% in twelve months. The yield on French two-year debt exceeds that of Spain, Italy, and Greece, and its risk premium to Germany has reached 80 basis points—20 above that of Spain.

Most economic commentators ignore monetary aggregates and the negative effects on growth and investment of the constant increase in government spending. However, the reality is that we live in a world where the economic impact of new units of currency is diminishing and generating negative results in many cases.

In developed economies, anemic economic growth requires more monetary stimulus, and government spending absorbs most of the new credit, leading to weak productivity, poor growth and unproductive expenditure.