I've given the strength of the US economy a lot of thought recently and it comes down to 8 main reasons. The two obvious ones are:
- Liberal labour and corporate laws
- abundance of resources (fossil fuels + fertile soil)
The other 6:
- Low housing prices due to vast land reserves and cheap construction. leaves more capital available to invest into the stock and bond markets
- An excellent system of highways. reduces transportation costs for companies and allows for high labour market flexibility (+ high willingness of Americans to commute large distances)
- Coherent labour market that spans roughly 330M people
- A nation wide well established 401k system that funnels a lot of the retirement savings into US stocks and bonds - incl. venture capital.
- higher affinity for risk taking. Americans are in large parts descendants of risk taking expats
- Large maritime borders and only two (friendly) neighboring countries
I would say that those are solid reasons historically, but I would say that stocks/401k/IRA have spun out of control and driven P/E ratios to stupid levels that are unsustainable. Also, housing prices are no longer affordable for the majority. For example, many people I know bought homes in 2019-2022 and they are now stuck. They could sell and make money, but then they’d be buying roughly an equivalent house to the one they’re in due to rising costs. They could rent, but rents have become extortionate.
- Liberal labour and corporate laws
- abundance of resources (fossil fuels + fertile soil)
The other 6:
- Low housing prices due to vast land reserves and cheap construction. leaves more capital available to invest into the stock and bond markets
- An excellent system of highways. reduces transportation costs for companies and allows for high labour market flexibility (+ high willingness of Americans to commute large distances)
- Coherent labour market that spans roughly 330M people
- A nation wide well established 401k system that funnels a lot of the retirement savings into US stocks and bonds - incl. venture capital.
- higher affinity for risk taking. Americans are in large parts descendants of risk taking expats
- Large maritime borders and only two (friendly) neighboring countries