Why the US economy stays strong despite Trump’s shockwaves (Alan Shipman, July 16, 2026, Asia Times)
The US also channels a higher proportion of its GDP into business investment and research and development than the EU. Europe was spending 270 billion euros less than the US on innovation in 2021, with this spending concentrated on its century-old car industry rather than new technologies.
Since 2025, AI has been the focus of US investment. This has helped the US maintain its hold over global technology and digital platforms. Rapid uptake of AI across US industry has also widened the margin by which its labor productivity growth is outpacing Europe’s.
Output per hour in professional services has increased by over 18% since 2019 in the US compared to just 5% in the EU.
Economy-wide productivity gains have allowed US real wages (wages adjusted for inflation) to edge higher since 2019. This has sustained consumer demand while also enabling the strong profit growth that has lifted US share prices to record levels. In contrast, average real wages in the EU have barely grown over the past 20 years while corporate profits in Europe remain subdued.The US technological lead could be dented by Donald Trump’s immigration clampdown, which extends to skilled scientists and students. Research suggests annual GDP growth rates in the US could currently be as much as 0.8 percentage points lower than if net unauthorised immigration had stayed on its pre-2025 trend.