In Dresden, Germany, the last car rolled off the line at Volkswagen’s Transparent Factory. In Spartanburg, South Carolina, BMW runs the world’s largest plant. The stark difference between these sites highlights a mystery many economists have pondered: why has the American economy continued to outperform its peers, even as the world has endured a succession of shocks?
From trade‑policy twists to Middle‑East conflicts that up‑swell oil prices, the United States has faced what most analysts feared would drag down growth. Yet the economy has pressed on, charging along at roughly a 2% annualised pace. Inflation has nudged the economy, but the feared combination of a sluggish economy and runaway prices has not materialised.
Joe Brusuelas, chief economist at RSM, believes the very trade‑war itself demonstrates American resilience. He says the “own‑goals” imposed by the Trump administration on trade and immigration showcase the underlying dynamism of the U.S. economy.
When a sudden tax on imported components fell on U.S. firms, rather than conceding lower margins, companies doubled down on investment. “Capital expenditure is 13.9 % of U.S. GDP, and it should be falling under the current mix of supply and demand shocks, yet it is not,” Brusuelas notes. Instead, productivity has risen sharply, leaving room for sustained growth.
Energy markets provide another piece of the puzzle. The Middle‑East war raised oil prices—a factor that historically would have harmed the U.S. economy—yet the shale revolution has insulated much of the country. Over the past twenty years, the United States has become a top oil and gas producer, reducing the sector’s contribution to GDP by half over the last fifty years, Brusuelas explains.
Europe, in contrast, relies on long‑term contracts and interconnected supply networks. After Russia’s supply cut to the region following the Ukraine invasion, many European economies were exposed, and the current tensions in the Middle‑East keep that risk alive.
Rebecca Christie, a senior fellow at the Brussels think‑tank Bruegel, points to culture. “Americans are solutions‑oriented and comfortable with short‑term risk for long‑term gain. Europe, by contrast, is risk‑averse,” she says.
Business and retirement structures echo this divide. In Europe, firms lean heavily on bank loans and workers’ pensions are capped by insurance contracts, limiting upside. In the U.S., companies can tap investors and capital markets, affording greater flexibility even amid market turbulence.
Nonetheless, Christie warns that macro resilience can hide underlying pain. “The U.S. is a land of very high inequality. If you are struggling, you will face a hard time because the labour market does not add a huge number of new jobs and costs rise,” she explains.
So far, there is little evidence of a tipping point. Indeed, American employers added 172 000 jobs in May, beating expectations. Still, recent inflation data shows consumer prices rising at the fastest pace in three years—a 4.2 % jump year‑over‑year, up from 4.0 % in April.
While the U.S. continues to appear robust relative to many advanced economies, higher energy prices, stubborn inflation, and widening inequality pose risks that could erode its current advantage.
In the end, the combination of flexible markets, rapid investment, abundant domestic energy, and a culture that tolerates risk has helped the U.S. weather shocks that have strained its peers.
As Brusuelas puts it: “It’s the cleanest shirt in a very filthy laundry.”
