American Exceptionalism
Three powerful forces in the world of investment that you never want to bet against: Momentum, Mean Reversion, and US Exceptionalism.
Heading into 2025, however, at least one will have to give.
A big majority believes there will be no reverting to the mean this time, and that the impressive momentum behind US dominance can go on and on.
It’s surpassingly hard to disagree.
But US outperformance hasn’t been eternal, and only dates back to the specific shock of the GFC, which knocked the stuffing out of the European corporate sector.
The very plausible danger is that inflation turns out not to have been beaten, and the Trump 2.0 policies to stimulate growth also spur a resurgence in price rises
John Authers Bloomberg 5 december 2024
What makes the US truly exceptional?
The sustained prosperity of the US is astounding.
The US then is an economic powerhouse, so much so that it has persistently run a large deficit in its capital account.
Donald Trump protests. Yet this is a powerful vote of confidence.
Then there is a related question, which is whether the relatively high inequality of the US and the insecurity of those in the bottom and middle of the income distribution inevitably lead to what I called “pluto-populism” in 2006:
the political marriage of the ultra-rich, seeking deregulation and low taxes, with the insecure and angry middle and lower middle, seeking people to blame for what is going wrong for them.
That in turn raises the most fascinating question of all: might Trumpism kill the US golden economic goose?
Martin Wolf Financial Times 3 December 2024
https://www.ft.com/content/a757fb35-889b-46a7-b32c-5e8e254f6450
Tillbaka till Rolfs länktips 5 december 2024
https://englundmacro.blogspot.com/2024/12/rolfs-lanktips-5-december-2024.html
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