Iceland vs. USA Economic Analysis

Iceland is in the midst of a crisis and raised interest rates today from 12% to 18%. The Iceland currency, the Krona, which has already lost half its value since January, and has been closed to trading, opened trading today and according to CNBC lost half its current value “boom, just like that.”

But if you look at the economic stats from 2007, you wouldn’t have guessed that something like this could happen to Iceland. So this leads to the question, can it happen here in the U.S.?

The answer might be found in comparing Iceland’s 2007 numbers to the U.S. numbers. Below you will find Iceland’s economic data with the U.S. data in parentheses:

Unemployment rate in 2007: 1% (4.6%)
GDP: 3.8% (2%)
GDP Per Capita: $40,400 ($45,800)
Inflation rate 5.1% (2.9% yeah right!)
Budget:
revenues: $9.64 billion?($2.568 trillion)
expenditures: $8.602 billion ($2.73 trillion)
Public Debt 27..6% of GDP (60.8% of GDP)
Current Account Balance??-$3.189 billion? (-731.2 billion)
Exports:
$4.793 billion f.o.b. ($1.148 trillion f.o.b.)
Imports:
$6.181 billion ($1.968 trillion f.o.b.)
Reserves of foreign exchange and gold:
$2.436 billion ($70.57 billion)
Debt – external:
$3.073 billion (2002) (This is the only stat that wasn’t from 2007)
($12.25 trillion (30 June 2007))

All stats from: https://www.cia.gov/library/publications/the-world-factbook/geos/ic.html#Econ

You can clearly see that Iceland’s economic data was superior to the U.S. in almost every category. But there is one major difference;

“Iceland’s Scandinavian-type economy is basically capitalistic, yet with an extensive welfare system (including generous housing subsidies), low unemployment, and remarkably even distribution of income.”

Isn’t this what our current leaders and future leaders want for Americans?

Does anyone expect a different result being that our economy is worse off than Iceland’s?

Doug Eberhardt

Related posts from the Fed Up Blog:

1. The Fed’s Last Hurrah
2. U.S. Debt Clock Reveals Time Isn’t On Our Side
3. Which Would You Prefer, Higher Taxes or Higher Inflation?
4. From Green Shoots to Drought? Making Economic Sense of Investing