WHEN US gross domestic product (GDP) growth is reported later this month, it is expected to come in at a solid pace of at least 2 per cent for the seventh quarter in a row, defying the once universal expectation that Federal Reserve rate hikes would trigger a recession. First, economists dialled those forecasts back to a “soft landing”; now, they are talking about “no landing”.

Conventional forecasting models have been more off the mark than usual in this post-pandemic recovery. But why? Perhaps the most overlooked explanation for American resilience is that, far more than other developed countries, the United States kept stimulating its economy well after the recession of 2020 was over.

Some of that fiscal and monetary stimulus is still coursing through the system, keeping growth artificially high and inflating both consumer and asset prices.