America's economy is the envy of the world. Will it stay that way?
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mar in dan woods, a big part of Donald trumps Victory in the presidential election came down to the economy.

A vast majority of americans think that the economy is not out working in their interests.

Simon orbit is U. S. Economic editor for the weekly magazine the economist.

The thing that is that when you look at amErica relative to other rich world countries, to other developed advanced economies, amErica is doing and hazard done remarkably well.

There is a disconnect there, right? Millions of america's personal economies are not feeling good, which is partly why I donnot transformed huge gains with voters across the country. But as Simon points out, the U. S. Economy as a whole is doing really well.

Today on the show, Simon lays out his argument for why the U. S. Economy has been and continues to be the envy of the world, but also why, with the election of Donald trump, america's economic exceptionalism could be at risk.

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You've heard the expression, keeping up with the Jones. Well, on a global level, the united states of amErica is the Jones is.

and believe IT or not, despite the turmoil of a pandemic and inflation, that economic dominance has actually accelerated.

Consider that in the past few years, U. S. Economic output has increased three times faster than countries in the euro zone.

Or consider this among the g. Twenty group of nations, which includes countries like canada, germany, china and japan. The U.

S. Is the only one whose employment and GDP is actually exceeded. Prepare the mic expectations. These stats and .

more appear in a recent report in the economist titled envy of the world in IT, Simon or benefit, and its coauthor Henry curr argue the U. S. Economy has weight performed, both its allies and its rivals.

And when I reached out assignment to understand why, he said, this economic exceptionalism is driven by four big structural factors. The first is productivity. So .

productivity is is absolutely key to understanding any economy. Y's growth potential ultimately be what what dictate tes. An economic size, you know, over a matter of years and decades is how many people are working and how productive they are.

So if you just look at per worker productivity in the U S, since ninety ninety, it's increased by about seventy percent, whereas in other rich world economies is closer to forty or fifty percent. So what drives that? Uh, one business dynes m, it's a lot easier for businesses to go bust, but also for new ones to be founded in the us.

It's easier for workers to move around to where they're actually needed. Number two, a lot of investment in capitals higher in the us and elsewhere. That's not just in physical structures but also critically in software research and development.

AmErica is very strong and that and the number three is tech dominance. Uh, american companies tend to be faster at adopting new technology, something that we're seeing now with artificial intelligence. So all of these things feed through together to make the U. S. A more productive economy.

okay? So productivity is one wind at the U. S. Economy back. The next one you to go into is energy as a key economic driver.

Yeah so I mean, this one is fairly straight forward and that there was the great shale revolution of the early two thousands. Obviously, environmentalists are not to terribly happy with the outcomes of that. But economically, it's quite profound its impact that has made amErica the world's biggest producer of both oil and natural gas.

In the first of all, it's good for the U. S. Terms of trade.

Energy is one of the few sectors in which the us. Is actually a net exporter. But more crucially, IT insulates amErica from global volatility, from global Price bikes. U. S. Consumers might complain a little bit about the Price of gas at the pumps, but the fact is, compared to heating Prices in europe, in asia, they're incredibly well off, incredibly well insulated.

A third thing, that spotlight as driving U. S. Out performance is the stock market. So how is this playing a role?

It's amazing. When you look at the numbers, the U. S. Economy is, you know, roughly twenty percent of the global economy, but the U. S.

Stock market is about sixty percent of the global stock market by capitalization. So know there really is outsized power there. You have a lot of faith in U.

S. Markets because the rule of law, which is something that attracts investors globally into america. If you're a tech start up anywhere in the world, you'll look to get listed in the U.

S. You'll look to set up Operations in amErica as well. Is one of these things that that is really a virtuous cycle for the us. economy.

If investment capital is sort of like radio waves washing over the planet, the U. S stock market is like a giant satellite dish, which is very good at bringing these waves of capital in that.

That's a great analogy. Ado you. I don't think I can do Better than that. I suppose you might say that because the radio waves are coming here, there is an interest in building kind of yet more satellite dishes. So it's you, once again, strength, begetting strength.

Finally, in your report, you talk about the U. S. Dollar as a source of strength.

And we've talked before on this show about how the dollar is the world's reserve currency, and IT gives the us. All these source of advantages. How do you see IT figuring into your picture?

Because the U. S. Dollar is the reserve currency.

Foreign investors, foregate central banks, they want to hold the dollar. They want to hold dollar based assets. That means that if the U. S.

Government issues debt, IT is always going to have customers for IT, which then means that if there is a financial crisis in the U. S, like we saw with covet the U. S.

Government, more than almost any other government in the world is able to rack up a very big deficit, finance that quite effectively, and then propel the economy back to growth. So IT really is kind of a get out of jail free card for the U. S.

Government and the U. S. economy. okay. So just a quick recap.

Productivity, energy, the stock market and the U. S. Dollar are all driving the U. S. Economy to, as you want to be the envy of the world right now, and sort of paints a very rosy picture of our economy. At the same time, you also write their potential downs, this sort of american economic exceptionalism.

Yeah, that's right. So I guess the first point is not so much necessarily a downside, but a caveat is that economic exceptional ism does not necessarily translate into sunshine and roses across the board. So I think the most concrete example there is longevity.

Today, a newborn e in the U. S. Can expect to live to about seventy nine.

Uh, in western europe is closer to eighty two years. That's a pretty that's a pretty big gap. Another point to make is that the us. Does have a lot higher inequality than most other economies. And you might argue that this is partly the result of an economic model that puts so much primacy on delivering profits, on driving growth.

So assign or at a an interesting pivot point, right, with the election just happening, do you think that with all of the things that are going on that this sort of U S R. Performance can continue? Well, so I think .

if you looked at IT in a in a political vacuum, ah IT will continue. The problem know, as we're cute aware today, is that we're not in a political vacuum and there's really, really extreme risks that are eminent in particular from the the trumpet end of of the bacteria. And whether he or somebody who subscribes to his agenda um is able to put things into place, such as cracking down on immigration, mass deportations, things that would really undermine the rule of law. They would also undermine faith in american markets, faith in the american dollar, and they would ultimately begin to to pull apart the roots of america's long term economic outperformance.

So I guess maybe there's A A little astrid s that could go with the headline america's economy envy of the world sea fine print yeah well.

I mean, I suppose you might say it's not a little as but but a big air is this .

episode was produced by Cooper catti kim with engineering by qui lee IT was factory cked by sir what s paddi hersh edited this episode caking cannas, or editor in the indicator production of pr.

This message comes to media sponsor marrow. Whatever your financial goals are, you want a straight ward path there. But the real world doesn't usually work that way.

Maria understands that. That's why with a dedicated maria adviser, you get a personalized plan and a clear path forward. Go to M L dot com slash bullish to learn more marrow, a bank of amErica company.

What would you like the power to do? Investing involves risk. Mayo lynch, peer spanner in Smith incorporated, registered broker dealer, registered investment advisor, member as I, P.

C. This message comes to media sponsor marrow. Whatever your financial goals are, you want a street forward path there.

But the real world doesn't usually work that way. Mary understands that. That's why with a dedicated mary adviser, you get a personalized plan and a clear path forward. Go to M L dot com slash bullish to learn more. Mara of amErica company, what would you like the power to do? Investing involves risk marial linch peer spanner in Smith in corporate, registered broker dealer, registered investment advisor, member as I P C.