U.S. Economic Leadership Continues
June 25, 2024
The U.S. economy has outpaced the rest of the developed world since the Global Financial Crisis, but that relative outperformance widened during the Covid-19 pandemic. As restrictions were eased, the U.S. economy experienced a surge in growth.
While U.S. real gross domestic product (GDP) is up 11.4% since 2019, the Eurozone and the United Kingdom have expanded at a rate of 3.9% and 2.7%, respectively, and the Japanese economy is flat. So, what’s behind this relative growth advantage?
The U.S. economy has benefited from a number of factors, such as fiscal stimulus that prevented job loss and boosted demand, strong U.S. consumer and corporate balance sheets, and the technological innovation of U.S. corporations, specifically within artificial intelligence.
Even though regional economic dominance goes through cycles, we believe the relative outperformance of the U.S. could continue for years. If that leadership persists, it should translate into profit margin growth and strong earnings, giving U.S. equities an advantage over their developed peers.
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