At a Glance:
- We examine the possibility that a stronger U.S. economy is due to increased intellectual property investments since the mid-2010s, when the euro area missed out.
- The data should be viewed with caution, but monetary policy may have a slower impact on the US economy than the euro area.
We analyze persistent growth differences between the US and the euro area. We focus on nonreciprocal explanations for: (1) the underlying factors behind productivity growth in the non-euro area USA; (2) The slow impact of equally tight Monetary Policy on both sides of the Atlantic on the US real economy.
US data from different sources can be mixed, but national accounts suggest that monetary policy has had little impact on US firms so far and that the impact of tightening has been slower than in the last rate-cutting cycle 20 years ago. Things are different in euro area countries where comparable current figures are available, for example in France. So Europe could get a double whammy: a positive supply shock and a swifter impact from the ECB's monetary policy.
By Gilles Moëc, Chief Economist at AXA Group and Head of AXA IM Core Investment Research at AXA Investment Managers
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