'The US economy will thrive': Why the market's 'Dr. Doom' is bullish on American exceptionalism despite Trump
Investors are on edge as President Donald Trump’s “America First” policies seem only to diminish the appeal of US assets, but to famed economist Nouriel Roubini, the fears are overblown.
That’s notable for a commentator the market has referred to over the years as “Doctor Doom” for his downbeat prognostications. But Roubini sees US markets constraining Trump’s most aggressive policies, and ensuring a continuation of American exceptionalism.
“America’s exceptional growth will survive Trump,” the economist wrote in Project Syndicate, stating that the country holds a key advantage that shouldn’t be discounted: technological leadership.
Trump’s protectionist pivot triggered foreign investors to rethink dollar and Treasury holdings, and the subsequent sell-off has sparked worries that US exceptionalism is over. Meanwhile, tariff escalations have amplified recession nerves, further cemented by Wednesday’s depressing GDP and labor data.
But Roubini has a brighter outlook.
First, he pointed out that the market has acted as a stopgap against Trump’s most extreme policy impulses, forcing him to implement a 90-day tariff pause and back off rhetoric that threatened Federal Reserve independence.
Market discipline, a responsible Fed, and rising pushback amid some congressional Republicans are among the key guardrails that could help mitigate a stagflationary scenario for the US, but it’s the country’s tech industries that will deliver future growth.
“The US economy’s potential growth will approach 4% by 2030, far above the International Monetary Fund’s recent estimate of 1.8%,” Roubini wrote. “The reason is obvious: America is the world leader in ten of the 12 industries that will define the future, with China leading in only electric vehicles and other green tech.”
Separately, he noted that these industries include artificial intelligence, robotics, bio-medical research, quantum computing, and space exploration.
In other words, technological advantages will keep the US relevant for international global investors, and should continue to draw in money regardless of what the next four years of trade policy bring.
“Even tariffs and the resulting uncertainty have not fundamentally changed the guidance from most big tech firms, AI hyper-scalers, and others. Many are even doubling down on AI investments,” Roubini added.
To be sure, America’s AI leadership has fallen under increased scrutiny as Chinese firms make significant progress on their own models. Nvidia CEO Jensen Huang told CNBC on Wednesday that “China is not behind” when it comes to AI developments, but emphasized that this is a long-term race.
Looking over the next few years, Roubini expects technological leadership to boost US growth and redistribute wealth.
“After an initial period of pain, the US economy will thrive,” he wrote.