Focus - How permanent is US exceptionalism?

In a new Focus report we look at the extraordinary outperformance of the US economy compared with the Euro zone and UK since Covid and ask whether it can continue. We find many of the reasons on the demand side are one-offs. For example, the energy shock, the differential wealth effect as US stocks and housing prices rose far more than in Europe and the consequent very different behaviour of savings rates. The supply side is harder to judge. It is likely that the US (accidental) experiment of 'running the economy hot' induced a good supply response. When Europe and the UK show stronger growth they could see some of that too. But the US still has the advantage of cheaper energy supplies and a more dynamic and entrepreneurial economy.