The American economy has achieved its highest output level in 31 months following Donald Trump’s election victory, driven by his promises of tax reductions, tariffs, and deregulation. The composite purchasing managers’ index (PMI) for the US rose to 55.3 from 54.1, substantially outperforming other G7 nations, with the UK, France, and Germany showing concerning signs of economic stagnation.
The remarkable performance suggests the US economy is expanding at an annualised rate of 2.5 per cent in the fourth quarter, building upon a robust 2.8 per cent growth in the previous period. This economic vigour positions the United States as the leading performer among G7 economies.
Business confidence has reached its highest point since May 2022, bolstered by Trump’s electoral triumph and anticipated interest rate reductions. The services sector emerged as the primary growth engine, with its index climbing to 57, marking a 33-month peak. Companies reported decreased inflation pressures alongside strengthened demand for their products and services.
The impact has reverberated through financial markets, with the US dollar strengthening by 0.6 per cent against major currencies, reaching levels not seen since July 2022. Wall Street demonstrated remarkable resilience, with the Dow Jones Industrial Average achieving its 44th record high of the year, closing at 44,296.51. The cryptocurrency market also reflected this optimism, with Bitcoin approaching the $100,000 milestone.
The economic surge stands in stark contrast to other major economies, particularly in Europe, where activity indices have fallen below the crucial 50-point threshold, indicating economic contraction. This divergence highlights the exceptional nature of the US recovery and its increasing economic dominance under the anticipated Trump administration.
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