TITLE: Economists Expect US to Extend Productivity Lead on AI Boom

US Productivity Lead Set to Persist Amid AI Surge

A global survey of economists reveals that more than three-quarters anticipate the United States will maintain or expand its productivity advantage over other nations in the coming years, propelled by artificial intelligence innovations, robust capital markets and relatively low energy costs.

Of 183 respondents from China, the Eurozone, the United Kingdom and the United States, 31 percent expect the US to retain its current lead in productivity — a key measure of how efficiently inputs like labor hours translate into goods and services. Another 48 percent foresee the country widening that gap. The poll, conducted in December, underscores broad confidence in America's economic resilience despite global challenges.

Productivity growth underpins wage increases, corporate profits and overall living standards. In the US, labor productivity climbed 10 percent between 2019 and 2024, driven by swift technological adoption and workforce shifts during the Covid-19 pandemic. In comparison, productivity in the UK and Eurozone remained largely flat, according to data from the Organisation for Economic Co-operation and Development (OECD).

The US economy is projected to achieve the strongest growth among G7 nations this year, supported by a technology-driven investment surge and stock market rallies that enhance wealth and consumer spending, particularly among higher-income households. These factors have offset some impacts from past trade tensions, though they have also sparked concerns about an overheated AI sector.

Key Drivers of US Dominance

Economists attribute the US edge to several structural strengths. Dynamic capital markets facilitate rapid funding for innovation, while a flexible labor force enables quick adaptation to new technologies. The nation's leadership in AI and digital tools positions it at the forefront of the next productivity wave.

The US is set to pull away from other developed market economies, said one investment strategy expert, citing advantages in emerging technologies. In contrast, Europe faces hurdles including fragmented infrastructure, rigid labor regulations and capital markets less conducive to high-risk ventures. Research and development in the region remains concentrated in traditional industries like automotive and pharmaceuticals.

Energy costs play a pivotal role as well. The US enjoys structurally lower and more predictable prices compared to Europe and parts of Asia, bolstered by policies prioritizing economic growth over other considerations. This stability supports manufacturing and data-intensive AI operations.

Business investment trends highlight the divergence. In the US, investment rose 24 percent in the second quarter of 2025 compared to the pre-pandemic period in 2019. The Eurozone, however, saw a 7 percent contraction over the same timeframe, per analysis from Oxford Economics.

Regional Challenges and Global Implications

Europe's productivity constraints stem from over-regulation, subdued investment and a business climate less welcoming to cutting-edge tech. The UK grapples with additional post-Brexit complications, which have diverted resources from innovation toward political and logistical adjustments.

The UK has spent much of the last decade addressing Brexit issues, diverting attention from technological progress, noted a finance professor. These factors risk widening the transatlantic divide.

Asia presents rising competition, particularly in AI. China holds the second-largest stock of venture capital investments in AI since 2012, trailing only the US and surpassing the EU by more than threefold, OECD figures show. Still, economists predict the US relative advantage will endure, though it may narrow as other nations advance.

Countries in Asia will approach the productivity frontier, eroding some US gains but not eliminating them, said an economics professor.

Risks and Cautions from Economists

Despite optimism, the survey uncovered apprehensions. The term "bubble" appeared frequently in responses, with 25 mentions, as economists flagged the risk of overinvestment in AI leading to a correction that could dampen US output.

A downturn in US tech stocks might ripple globally, tightening financial conditions, curbing external demand and heightening risk aversion. The poll, which leaned toward UK and Eurozone perspectives with 207 total economists contacted (though not all answered every question), still reflected majority support for sustained US leadership.

Other vulnerabilities include trade protectionism, restrictive immigration, fiscal strains and political uncertainty. "Productivity benefits from trade have been sacrificed for minimal tariff gains," warned a financial economics director.

A public policy expert highlighted a potential "toxic combination" of tariffs, declining government efficiency and anti-immigration measures that could inflict long-term damage.

One economist cautioned that early AI investments might misallocate resources, with benefits accruing more to adopters abroad than initial developers. The US starts from a strong base, but sustaining momentum requires addressing these headwinds.

Overall, the consensus points to continued US outperformance, with AI as the primary catalyst. As global economies navigate technological shifts, the survey suggests America's productivity trajectory will shape broader international dynamics for the foreseeable future.