The United States might be grappling with a host of serious economic maladies, but comparatively speaking, we're still better equipped to continue growing than many other advanced economies, experts say.
"From an overall perspective, we are just so much better off," says Michael Czinkota, professor of international business at Georgetown University. "There is still American exceptionalism when it comes to economic well-being."
While we share many of the same systemic problems afflicting similarly situated economies, such as high unemployment and high public debt, experts say the dynamic, resilient nature of the U.S. economy affords us more advantages when it comes to recovering from one of the worst recessions in history.
"The U.S. is the best example of a creative, dynamic market economy," says Jan Randolph, director of sovereign risk at IHS Global Insight. "The creative-destruction process is most fully revealed in the U.S. In the last few years we've seen a lot of destruction, but we also shouldn't underestimate the amazing, sometimes stunning creative power. Sometimes that's difficult to see in recessions."
Here's a list of five advanced economies that face economic challenges more serious than our own:
Ireland. Nagging troubles in Ireland's massive banking sector continue to plague the beleaguered country, which announced in late March that its banks need an additional $34 billion—on top of the $67 billion already committed by the European Union and International Monetary Fund—to cover losses from the country's housing bust. "Ireland has a very special problem because the banking sector reached a size that, relative to its economy, was completely crazy," says Antonio Fatas, professor of economics at INSEAD, a graduate business school with campuses in Europe and Asia. "A lot of those banks failed and when the government had to bail them out, it really made a big hole in the budget account."
That "big hole" totaled as much as 40 or 50 percent of Ireland's gross domestic product, says Fatas, which puts an enormous debt burden on the country going forward. While both the euro zone governments and International Monetary Fund have stepped up to bail out the Emerald Isle, experts say the ripple effects will last for many years. "Ireland is beginning to grow again, but it's going to be a long haul to try and repair the banking system," Randolph says. "The taxpayers in Ireland will have to bear the costs for generations because debt levels have gone through the roof."
Greece. Nearly a year after it was saved from near default by a joint bailout from the European Union and International Monetary Fund, the Greek economy continues to slump beneath the weight of its nearly $500 billion debt. Even if Greece meets the targets of its bailout package, some say the country will still be saddled with an unsustainable debt burden. This uncertainty, in turn, has caused speculation about Greece's need to restructure its debt, which has driven up the country's borrowing costs.
"Greece is a failure on many dimensions," Fatas says. "Greece has mismanaged its budget much more than the U.S., they've had even greater deficits, and their economy is doing really poorly."
Chronic problems with the country's tax base have added further strain to Greece's struggling balance sheet. "The tax base is very small. Most people don't pay taxes, and so it's very hard to raise revenues," Fatas adds.
Worries about the state of the Greek economy aren't limited to its borders. Experts say Greece's debt problem could unsettle countries such as Germany and France—big holders of Greek debt—and spook bond investors internationally. "With Greece, it's not just the debt, it's also trust in the Greek government," says Czinkota. "Financial markets have lost a lot of trust, and then nobody wants to help you out."
Spain. High unemployment continues to be a stumbling block for the U.S. recovery, but at 8.8 percent, our unemployment rate pales in comparison to Spain's jobless rate, which stood at a record 20.5 percent in February. The rate is even higher for younger workers, at about 40 percent.