Eroding US exceptionalism will impact world economy

GLOBAL investors have long grown wealthy by following the maxim of never betting against the US economy. Yet, there are growing signs that key foundations of this “US financial exceptionalism” are eroding in what could be an era-defining moment.

Unchecked, the impact could be a dramatically different global financial system for years to come – not only with lower volumes of international trade, but also smaller capital flows, fewer economies of scale for businesses, and slower growth in productivity and living standards worldwide.

Longstanding pillars of US financial exceptionalism include institutional integrity, the rule of law, predictable and stable economic policies, central bank independence, deep capital markets, and a core government belief in private enterprise. Underpinning these foundations are the strengths of the US university research system, excellence in science and medicine, traditions of venture capital and entrepreneurship, supportive regulatory and tax structures, and transparent government procurement processes.