Signal The US shows a structural uptick in productivity and rates alongside inflation above target

Summary

MGI reads the United States as the only major economy currently showing signs of productivity acceleration, with a structural rise in both productivity growth and interest rates compared with the prepandemic period. Productive investment has grown recently, driven especially by the technology sector. High equity values, at about 3.7 times GDP, signal market confidence but also carry some downside risk. At the same time, inflation remains above the Federal Reserve's 2 percent target and government debt, at about 120 percent of GDP, is near all-time highs, which adds further inflation risk. The report stresses that this pathway is not guaranteed over the long term, and names the fiscal tightrope and corporate earnings as the swing factors that could knock the US off it.