Outlook: American peak, Japanese trough

SOMETHING unprecedented in post-war economic history is about to happen, possibly this week, but certainly within the next month or two. Before long the unemployment rate in the United States is going to fall lower than the rate in Japan. For the first time in living memory, the land of opportunity and insecurity is about to offer its inhabitants better job prospects than the land of lifetime employment.

This week's employment report from the US is likely to show a further decline in the unemployment rate to 4.3 per cent. At the present turbo- charged pace of economic growth in the US, this will fall even lower. Meanwhile the latest figures show that unemployment in Japan has soared from 3.5 per cent of the workforce - already very high by historical standards - to 4.1 per cent, and is heading firmly upward. It will only take another month, two at most, for these trends to cross. There could scarcely be a more telling symbol of the growing economic strength of the US and weakness of Japan.

Certainly it would be easy to cite this milestone as evidence not just of the triumph of the Anglo-Saxon over the Asian model of capitalism, but also of its superiority. Indeed, it is positively satisfying to do so, given how much the red-blooded, free-market variety had fallen out of fashion with trendy pundits who spied advantages in Japanese long-termism.

However, a little bit of caution is needed. Part of the explanation for the stellar combination of rapid growth, low unemployment and low inflation in the US is just that the economy is at that transient stage of the business cycle when everything goes well for a little while. It would be foolish to assume the US has achieved the holy grail of economic policy - abolition of the business cycle. The next stage is for inflation to grow, and then as interest rates are tightened to counter these pressures, for growth to slow and unemployment to climb.

On the other hand, there is almost certainly also some truth in the "new paradigm" model of the US economy. Some of the long-awaited fruits of new technologies are at last being harvested and the economy's growth potential probably has increased compared with the 1970s and 1980s. It is at times like these, when the economic environment is changing rapidly, that free-wheeling and entrepreneurial variants of capitalism are likely to perform best - while those built on tradition and fixed relationships will suffer by comparison.

Start your day with The Independent, sign up for daily news emails
Sport
England's women celebrate after their 3rd place play-off win against Germany
Women's World CupFara Williams converts penalty to secure victory and bronze medals
News
newsHillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
Sport
wimbledonScot will face Ivo Karlovic next
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test