Weekly Wrap: Europe’s Economy Struggles
It’s Friday, and it’s time for the Weekly Wrap. Let’s take a closer look at the past week in economic and financial news—and, as always, we’ll throw in a bit of history. Stick around.
Let’s dive in.
The American Economy Outpaces European Growth
Do you remember the conversations around President Trump’s immigration policies and tariffs? There were concerns about their potential negative effects on US growth. Well, the narrative has shifted. The International Monetary Fund has recently released its latest projections for global economic growth, and our European counterparts are forecasted to grow by only 0.9% this year and 1.2% next year. For instance, France is looking at a growth rate of merely 0.6% this year, while Germany is set for 0.7% in 2026.
In contrast, the US is expected to achieve a growth rate of 2.3% this year and 2.2% next year. So, it seems that we’re surpassing Europe. Much of their conversation centers around international protocols and, well, a kind of tolerance that feels like it’s holding them back from the more aggressive economic stance of Trump’s administration. Why? A significant factor is the energy sector. High energy costs are hitting Europe hard, while the US benefits from being a major energy exporter—a scenario that helps our economy. Additionally, the US is leading in tech investments, especially in AI.
Sluggish growth in Europe is largely a matter of policy choices. Europe has untapped potential for energy production but often prioritizes climate change ideals and imports instead. Oddly enough, this hinders them technologically since their regulatory framework tends to stifle innovation. By boosting domestic energy production, the US is not only technologically competitive but also more resilient to supply constraints.
Success Stories: Costco and Shared Prosperity
But let’s not forget that growth isn’t everything. What we really want is shared prosperity and a good quality of life for all workers. Some critics from Europe like to frame the US as a place where the average person struggles, unable to secure a decent living wage or healthcare. However, that’s not the whole picture.
A recent piece from the Wall Street Journal highlighted Tony Barzal, a 60-year-old Costco cashier who boasts over $1 million in retirement savings and earns $32.90 an hour. In 2009, he bought a comfortable home and has managed to travel to Europe several times in the last decade. Barzal isn’t an isolated incident—Costco has reportedly “thousands” of employees who are millionaires.
Moreover, Costco offers a robust health plan with only a $15 copay for regular visits, while in the UK, people often struggle for basic dental care, dealing with long wait times for “free” services. Private healthcare costs are a reality in many parts of Europe, showing how the system functions differently compared to the US.
Contradictory Views on America’s Role
Interestingly, the day after the IMF’s predictions came out, the Wall Street Journal published an essay by Stephen Marche in the New York Times that discussed a so-called “Zombie America,” interpreting Trump’s policies as damaging. He painted a picture of countries like Canada and those in Europe becoming more self-reliant and independent of US influence.
Marche, who hails from Canada, might be a bit biased in his outlook. But it’s hard to buy the idea that Canada is thriving while simultaneously experiencing a growth rate lower than the US—1.1% this year and 1.7% next year doesn’t scream success. It seems he’s bemoaning the end of a time when the US shouldered the costs for their policies.
Future Insights from El-Erian
In a compelling guest essay for the New York Times, Mohamed El-Erian provides a thoughtful rebuttal to these claims. He examines the shifting economic landscape under Trump and references a significant speech by Treasury Secretary Scott Bessent, emphasizing a transition towards a more structured economic strategy rather than merely temporary disruptions.
El-Erian insists that the underlying principles he outlines represent a permanent shift rather than a fleeting phase. He touches upon the idea that American economic strength is now intertwined with national security and technological leadership. To adapt and thrive, leaders across various sectors must acknowledge and respond to these changes.
Unfortunately, certain interpretations missed the mark, blending Bessent’s theories with Trump’s broader agenda. The reality is that the US is no longer willing to accept an economic model that primarily benefits others at its own expense, an outdated practice that’s becoming increasingly impractical.
Mamdani’s Controversial Immigration Map
Meanwhile, Zoran Mamdani’s controversial depiction of immigrant neighborhoods in New York City, which included places like Little Guyana while seemingly omitting historically significant areas like Little Italy, has stirred up debate. This led to backlash from the Italian-American community who felt their history was overlooked.
While some defended his portrayal by noting that Little Italy has changed over time, others found fault with the map for suggesting neighborhoods that don’t accurately represent current immigrant populations. Mamdani seems to include areas that align with his approval, which can feel inconsistent.
Beyond its artistic merit, the map may actually serve as an unintended resource for immigration enforcement, indicating where undocumented immigrants reside.
A Historical Perspective on Andrew Jackson
Finally, let’s take a step back in time. On July 10, 1832, President Andrew Jackson vetoed the renewal of the charter for the Second Bank of the United States. This historical moment was framed around the concern of concentrating financial power and the interests of ordinary Americans.
Despite the Senate’s attempt to override his veto, Jackson maintained that a financial monopoly benefitted a select few at the expense of many, a claim backed by his own interpretation of the Constitution. His decision was pivotal in the 1832 presidential election and ultimately favored a populist approach, helping to shape the American economy moving forward.
