Over the past two years, the notion that the U.S. economy and its stock market was outperforming the rest of the advanced world gained salience and came to be widely interpreted as a new form of American exceptionalism. Last October, The Economist claimed that the U.S. economy was the “envy of the world” and that it had “left other rich countries in the dust.”

The election of a purportedly pro-business president and the Republican sweep in last November’s elections reinforced expectations that America’s economy and equity markets would continue to standout in 2025, especially in comparison to a supposedly moribund Europe and a sluggish China.

However, initially high expectations for a Trumpian boost to economic growth, based on anticipation of significant deregulation and tax cuts, have since floundered as the reality of heightened policy uncertainty and protectionist measures hit consumer sentiments and business confidence.

The Trump administration’s crude but significant shift towards foreign policy realism, and its haphazard execution of economic threats and trade tariffs, have ushered in a more

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