Why the US Economy Continues to Outperform
The performance of the US economy has distinguished itself in recent years relative to the rest of the world. The American economy is driven overwhelmingly by services and domestic demand, with relatively low exposure to manufacturing and export trade. The US economy has also benefitted enormously from advances in technology whereas most other major economies have failed to keep pace. The US is the world leader in technological innovation and by a wide margin. Both US and world inflation will remain lower than otherwise, especially if China continues its policy of overproduction and dumping of cheap manufactured goods into world markets.
Global bond yields will likely remain lower than otherwise, because of positive inflation trends and expectations for slower growth in world GDP. The US equity market will likely fluctuate within a volatile trading range until bond yields reverse direction and drift higher. A sustained rotation in global equity leadership in favor of non-US markets will occur once the US relative GDP growth advantage begins to fade. The US dollar will remain stronger than otherwise until the wide gap in GDP and profit growth rates favoring the US moves in reverse… READ MORE
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