American exceptionalism: Is it finally staring at its sunset?

America thrives on risk and opportunity but even that can change

- ALLISON SCHRAGER

The American economy really is exceptional. It is richer, more innovative, and continues to expand at a high rate compared to most of the developed world. It has been extra special over the last 15 years, with its equity market outperforming any other country as growth prospects for China and Europe dimmed.

But it seems like its exceptionalism might be ephemeral. Uncertainty around trade and the future strength of the dollar has led some big European investors to retreat from American stocks. The problem may go deeper. Less than 100 days into a second Trump administration, commentators are already discussing the coming end of American exceptionalism.

Many things make the American economy exceptional. For one, it houses the deepest and most liquid capital markets, which help channel money to its more productive uses. But what makes it truly extraordinary is its dynamism, which underpins innovation and productivity, attracting talent from around the world.

To figure out if America's best days are behind it, it is necessary to separate short-term exceptionalism based on current financial conditions and longer-term structural exceptionalism that has been a feature of the US economy for the last century.