THE AMERICAN model has taken a bit of a battering these past few years. The country’s foreign policy is, to put it mildly, not much admired around the world. Domestically, the nation is believed by foreigners to be in the grip of a pre-Enlightenment rapture of fundamentalist bigotry and prudish repression. Even its once great cultural exports — Dallas, Disney, Dr Atkins — are dead or in decline. In a cruel inversion of the transatlantic exchange of the last 50 years, you get Madonna and Gwyneth Paltrow, we get Pop Idol and Ozzy Osbourne.

But when it comes to economics, all but America’s most fervent critics can still only marvel. Consider the dry data. In the three months to the end of June, US gross domestic product expanded at an annual rate of 3.4 per cent. That was the ninth straight quarter in which growth topped 3 per cent; by miserable contrast, Germany has not had nine quarters in the last 50 in which its economy expanded at that pace. The US unemployment rate is down to 5 per cent. Wages are growing healthily.

The story is more remarkable when you stand back to take a broader perspective. Remember America’s infamous “bubble economy”? It was a common assumption that the 1990s boom was all simply the result of internet hype and frenzy, and that when the seven years of feasts were over we would have a famine of Biblical dimensions.

Well, this is what happened — after years of stellar growth in the second half of the 1990s, the economy did experience a recession in 2001 — but it was the shortest and mildest in memory. Since the middle of 2003, thanks in part to timely policy adjustments, growth has continued more or less where it left off.

Look back further. The 2001 recession followed the longest peacetime expansion in American history; that followed an earlier, short, shallow recession in the early 1990s. The US business cycle used to last about six years — with five years of tepid growth followed by a year or two of nasty recession. But in the last 23 years the US has had only two years of moderate downturn, separated by ten and a half years of brisk expansion.

All but the most welfare-loving Frenchman must thus acknowledge, however reluctantly, that there’s something about the American economy that, put simply, works. But there’s one group of critics who are distinctly unimpressed with the US economic miracle: the American people.

For a supposedly positive nation, Americans are in a strikingly sullen mood. According to a Washington Post/ABC News poll last month only 4 per cent of the public rate the economy to be in excellent condition; a further 37 per cent describe it as good. But 59 per cent say it’s either not good or poor. This incongruous misery is reflected in a broader national funk. Only 32 per cent of Americans think the country is on the right track; 54 per cent say it’s headed in the wrong direction.

Economic pessimism is driving much of the political agenda; Congress is antsy about foreigners taking over US companies or undercutting US workers through “unfair” trade practices. Why, in the face of abundant evidence of their own economic success, are Americans so miserable?

There are several possible explanations. First, the constant stream of bad news from Iraq may be casting a long shadow over America’s self-confidence. Possible, but unlikely. Most polling suggests that people make a distinction between economic prospects and broader geopolitical issues.

Second, it may be that that Americans are concerned about the fragility of the nation’s economic performance. The “bubble economy” crowd insist that the hangover that America was due has only been postponed. The growth of the past few years has been bought at growing imbalances in the economy — rising debt, a house price bubble, a current account deficit that will eventually produce a run on the dollar.

There’s some truth to this; house prices are clearly frothy; the dollar must surely fall further. But it’s overdone. And as an explanation for the public mood, it really won’t work. I doubt that, after they’ve tucked their children into bed at night, millions of Americans are checking out the state of the dollar on the Tokyo foreign exchange market.

The real problem, I suspect, lies in the paradox of the efficient modern globalised economy that the US has become. The factors behind America’s impressive performance are the very same factors that make Americans uncertain and nervous about their future. Since the late 1980s, its flexibility and dynamism has made the US both the main driver and the main beneficiary of the economic forces at work in the world: technological change; deregulation and competition; globalisation.

These have combined to raise productivity, lift living standards and quell the inflation that bedevilled the industrialised world for decades. It is no accident, by the way, that, after the US the other major industrial economies to thrive in the last decade have been the UK, Australia and Canada, all with similar economic models.

But even as they sharpened US competitiveness, these forces pierced Americans’ own economic security. Nothing illustrates this better than the growth of China. The emergence of China in the last 15 years has contributed enormously to US prosperity. Chinese investment in US financial assets has helped to keep interest rates low; more importantly, the availability of cheap labour and products from Asia has reduced corporate costs and suppressed prices for consumers. And yet nothing has so unnerved Americans as the fear of China — that unscrupulous American companies are exporting US jobs to the East.

There are global lessons in the discomfiting success of the US economy. Creative destruction not only produces winners and losers; it makes even the winners nervous. The natural human instinct is to want to shelter from such turmoil. But the real winners will be the ones who embrace it.

gerard.baker@thetimes.co.uk

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