More than three-quarters of economists expect the US to maintain or widen its productivity lead over the rest of the world, because of artificial intelligence, deep capital markets and relatively low energy costs, a Financial Times survey has found.
In the global poll, 31 per cent of 183 respondents thought the US would retain its advantage in productivity, while another 48 per cent expected the country to increase its dominance.
The economists were based in China, the Eurozone, the UK and the US.
Productivity growth — which measures progress in converting inputs such as hours worked into goods and services — ultimately allows companies to increase wages and profits, improving living standards.
US labour productivity rose 10 per cent between 2019 and 2024, thanks to rapid technological advances and the reallocation of workers during the Covid-19 pandemic. By contrast, it remained largely stagnant in the UK and Eurozone, according to OECD data.
Jumana Saleheen, head of Vanguard’s investment strategy group in Europe, said US productivity was set to “pull away from other developed market economies” thanks to the country’s dynamic capital markets, flexible labour force and lead in emerging technologies.
She added that Europe risked “falling further behind”, with research and development still heavily focused on traditional sectors such as automotive and pharmaceuticals.
Saleheen also noted structural challenges for the EU, including fragmented infrastructure, more rigid labour markets and less supportive capital markets.
The US economy is set for the strongest growth in the G7 this year, according to the OECD — buoyed by a tech-led investment boom and stock market gains that are bolstering wealth and spending among better-off households.
The gains have helped counter some of the economic damage done by US President Donald Trump’s trade wars but have also raised fears of an unsustainable AI-related bubble.
The FT survey, which was carried out in December, suggests economists do not expect the trends powering US outperformance to be reversed soon.
AI and related digital technologies were the new productivity frontier, said Nina Skero, chief executive of the Centre for Economics and Business Research, and the US’s “position as a leader in investment and development of these technologies will extend the US’s productivity lead”.
The trend is supported by a divergence in business investment. In the US, investment jumped 24 per cent in the second quarter of 2025 compared with the same period in 2019, before the pandemic. It contracted 7 per cent over that time in the Eurozone, according to Oxford Economics.
Some economists surveyed by the FT warned that the surge in AI investment could reflect a “bubble” — a term mentioned 25 times in responses — and cautioned that a sharp correction might weigh on US output and productivity.
A reversal in the stock market gains made by US tech could also have international repercussions via tighter financial conditions, softer external demand and rising risk aversion, some economists said.
But the majority of respondents to the poll, which represented the UK and Eurozone more heavily than China and the US, still expected America to maintain its productivity edge globally. Overall, the poll surveyed 207 economists, although not all responded to every question.
The US was starting from a “position of strength” in the productivity race, said Thomas Simons, chief US economist at Jefferies.
Respondents also pointed to the US’s structurally lower and more predictable energy costs, flexible labour market and large domestic economy.
The US benefits from “structurally lower and more predictable energy costs than Europe and many Asian economies, underpinned by an administration that treats energy policy as a driver of economic prosperity rather than a vehicle for moral posturing at the expense of growth and living standards,” said Martin Beck, chief economist at the consultancy WPI Strategy.
Europe is widely seen by economists as constrained by over-regulation, weaker investment, rigid labour markets and a business environment less favourable to cutting-edge technologies. The UK had the additional weight of the Brexit legacy to deal with, some economists contended.
“While the US and others have made major strides in AI, the UK has spent much of the last decade chasing the Brexit tail, diverting attention and resources from innovation,” said Evarist Stoja, professor of finance at the University of Bristol Business School.
Experts acknowledge that the US faces rising AI competition from Asia. “Other countries — particularly in Asia — will move to the frontier, meaning that the relative advantage of the US will erode somewhat but will not be eliminated,” said Jagjit S Chadha, professor of economics at the University of Cambridge.
China has the second-largest cumulative venture capital investment in AI since 2012 after the US and over three times more than the EU, according to the OECD.
The US may be at the forefront of the AI wave, but “much of this may prove a misallocation of resources,” said David Owen, chief economist at Saltmarsh Economics. “Ultimately, much of the benefits will go to the users of the technology (elsewhere), not the early-stage innovators.”
Many economists also highlighted risks from US trade protectionism, restrictive immigration policies, fiscal imbalances and political instability that could eventually undermine productivity growth.
US productivity gains from trade “have been traded away for chump change tariff revenues”, warned Robert Barbera, director of the Johns Hopkins University Center for Financial Economics.
Jonathan Portes, professor of economics and public policy at King’s College in London, warned that a “toxic combination” of tariffs, an erosion of the quality of US government administration and anti-immigration policy would “over time do significant damage to the US economy”.
Additional reporting from Olaf Storbeck, Claire Jones and Thomas Hale
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