The Contradictions of the American Economy
Energy Expansion and Conflicting Economic Policies
In the United States, contradictions in economic and energy policies are becoming more evident every day.
As the Biden administration advances an ambitious environmental agenda, oil and gas production has surged to record levels, positioning the country as one of the world’s leading energy exporters.
These actions respond to heightened energy tensions following the war in Ukraine and Europe’s supply chain shifts. Paradoxically, however, such energy decisions risk undermining Biden’s longer-term commitment to transitioning toward a green economy.
The Federal Reserve, in turn, is under pressure to adjust interest rates in response to potential economic slowdown. Following a period of hikes aimed at curbing inflation, there are signs that the central bank may reverse course and implement rate cuts.
Historically, rate cuts during recessions can exacerbate stock market declines, while cuts made during periods of stable growth help strengthen the market. This reflects the Fed’s dilemma: controlling inflation without stifling growth and private investment in the US.
These economic challenges come amid a politically polarized environment.
The Trump and Biden administrations, each with distinct approaches, have both relied on rising deficits and protectionist trade policies, particularly toward China.
Biden, however, differs by using targeted tariffs to boost strategic sectors and infrastructure, while Trump’s approach leaned on tax cuts for the private sector.
Despite differences, the labor market has remained robust in both administrations, driven by domestic demand and differing immigration policies that underscore an increasing need for labor .
These contradictions outline an uncertain future. On one hand, the energy expansion, though temporary, may undermine environmental priorities; on the other, fiscal and trade policies lacking a cohesive long-term strategy risk eroding the resilience of the American economy.
It is a delicate balance, where any misstep could have serious consequences on the global stage.
Sérgio Vieira
@sergiovds at X, Bluesky, Threads, Mastodon, Medium, Instagram
mailto: Projeto Impressões Digitais
Brazilian Portuguese version in Medium