Why the US economy keeps defying the odds
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- US economy grew at an annualized ~2% rate in May and added 172,000 jobs, smashing expectations, while consumer prices rose 4.2% year-over-year (up from 3.8% in April) — the fastest pace in three years
- Capital expenditure hit 13.9% of US GDP and has not slowed despite tariffs, mass deportations, and Middle East energy shocks
- Volkswagen closed its 'Transparent Factory' in Dresden, Germany, while BMW runs its biggest global plant in Spartanburg, South Carolina — illustrating the divergence the article sets out to explain
- Fracking and alternative fuels have cut oil's contribution to US GDP per unit by half over the past 50 years, leaving the country far less exposed to Middle East energy shocks than European rivals reliant on long-term gas contracts
- European energy strategy — long-term contracts and interconnected supply networks — left the continent exposed after Russian gas was cut following the Ukraine invasion, and the Middle East tensions keep that vulnerability live
- Bruegel's Rebecca Christie warned the US has 'very high inequality' and could hit a tipping point if the labor market weakens and housing crises deepen, even with a strong dollar and stable banks
- RSM's Joe Brusuelas called Trump's tariffs and immigration curbs 'own goals' that paradoxically became the strongest proof of underlying US dynamism, calling America 'the cleanest shirt in a very filthy laundry'
Why it matters: Structural US advantages — shale energy, equity financing, and a risk-taking culture — explain why tariffs and immigration curbs haven't broken the economy. But with consumer prices at a three-year high (4.2%) and Bruegel's Christie warning of an inequality tipping point, the cushion that absorbs self-inflicted shocks is thinning, and the article's own final warnings deserve more weight than its 'cleanest shirt' framing implies.
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