After two years of US exceptionalism during which growth far exceeded initial projections, the US likely will face a higher hurdle in 2025 as optimism catches up to expectations. The US economy could underperform this year as fiscal stimulus wanes and aggressive immigration and trade policies take effect. Meanwhile, the rest of the world may see better relative economic growth. Other areas that have lagged the US on a prolonged basis finally may be poised to surprise positively, clearing low expectations for growth. US exceptionalism may diminish as growth broadens out—moving beyond, for example, overvalued segments like the Magnificent Seven stocks to include undervalued and underinvested asset classes—which could shift capital out of the US.
Overall, the outlook for global growth looks reasonable. A global reflationary backdrop, spurred by central bank easing in the US and around the world, should be further supported by a historically strong consumer, robust business balance sheets, remaining liquidity, and elevated spending.
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Groupthink is bad, especially at investment management firms. Brandywine Global therefore takes special care to ensure our corporate culture and investment processes support the articulation of diverse viewpoints. This blog is no different. The opinions expressed by our bloggers may sometimes challenge active positioning within one or more of our strategies. Each blogger represents one market view amongst many expressed at Brandywine Global. Although individual opinions will differ, our investment process and macro outlook will remain driven by a team approach.
