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The end of US exceptionalism – an interview with Samy Chaar
Article published in finews on 14 July 2025
The global economy is shifting away from U.S.-led growth and into a period of deceleration, warns Lombard Odier’s Chief Economist Samy Chaar. While a recession may be avoided, political risks and investment paralysis loom.
Mr. Chaar, the first half of this year was turbulent. Will the second half follow the same path?
We are seeing a shift away from a U.S.-dominated growth narrative toward a clear deceleration. This is being driven by political uncertainty and tariffs – some of which have already been imposed by President Donald Trump. The environment is becoming more difficult. That said, a recession is not our base case at this point.
You cite uncertainty as a key factor. Should we expect a wave of layoffs?
Companies are operating in a climate where they no longer know what rules will apply tomorrow. As a result, they’ve become more cautious when it comes to capital expenditures. We’re not seeing mass layoffs, but firms have effectively put hiring on hold.
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So your base case excludes a recession. Why?
There are three main reasons. First, labour markets in both the U.S. and Europe remain solid – people are employed, and we’re not seeing widespread job losses. Second, for the first time in years, we’re seeing positive fiscal signals out of Germany. The investments announced by the new German government are what we would call “good debt” – they generate economic stimulus.
As long as President Trump retains full control the political environment will remain volatile
Third, China is doing everything it can to avoid a hard landing. While it hasn’t announced a large-scale stimulus, targeted support measures remain likely.
You mentioned political uncertainty, largely driven by U.S. policy. How long will this persist?
As long as President Trump retains full control – meaning the Senate, the House of Representatives, and the Supreme Court – the political environment will remain volatile. I see little chance of stabilisation before the midterm elections in November 2026. For companies, this translates into postponed investment decisions and hiring freezes. It’s a classic “wait and see” scenario.
It’s hard to say whether there will be any true winners. Perhaps China ends up losing more than the U.S. – in which case, Trump would have achieved his political goal of weakening China. What will be interesting is whether Europe – especially Germany – can benefit from its pivot toward greater economic autonomy and infrastructure investment. I’m hopeful this could generate momentum for a broader European recovery.
Are you already seeing a shift in capital away from the U.S.?
Yes, but only to a moderate degree. The U.S. remains the most important market globally. At one point, U.S. assets accounted for 70% of global equity market capitalisation – a historic high. If the narrative of U.S. exceptionalism begins to fade, capital will likely flow back toward Europe and select emerging markets. That said, the U.S. market will remain dominant – just not as overweighted as before.
The dollar can weaken without ending the global “dollarisation” phenomenon
China’s economy is structurally divided. The industrial and manufacturing sector remains competitive and is performing well. However, domestic demand is weak. An ageing population, a lingering property crisis, and high savings rates are suppressing consumption. The government is likely to provide targeted support but without deploying a large-scale stimulus. We expect stabilisation, not a boom.
The dollar has lost ground. Are we witnessing the end of an era?
No. The dollar can weaken without ending the global “dollarisation” phenomenon. As long as the U.S. remains the world’s main source of aggregate demand – and Europe, China, Japan, and others remain export-driven economies – the dollar will continue to be the world’s dominant reserve currency. There is simply no viable alternative until a new global demand engine emerges.
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