The term American exceptionalism has been used quite widely in recent years. However, the concept has been around since the mid-19th century, suggesting that there is something about American society, culture and economics that sets it apart from other countries on an enduring basis.
By exploring the concept of American exceptionalism through an economic and investment lens, we looked to answer the following questions:
- Is American exceptionalism real?
- Can it continue?
- What does it mean for investors?
Economic exceptionalism
In terms of its economy, the US has generated persistent long-term growth, and while other regions have experienced periods of strength, they have broadly struggled to deliver the same reliable long-term outcomes.
Of course, today there are risks to the US maintaining its successful economic track record. A prolonged recession, higher inflation, policy missteps, and/or competitive threats from other regions are all distinct possibilities. One, or any combination of these, could become a chink in the American armour.
Are the economic foundations that have supported sustained growth since World War II robust enough to survive over the longer term?
Exceptional equity markets
The past successes of US economic growth have largely translated into a strong equity market. A favourable regulatory backdrop, attractive management incentives, strong links to academia and the emergence of innovation hubs have combined to create an environment that has been particularly rewarding for shareholders.
