The core of Roubini’s argument rests on a simple hierarchy: tariffs and policy noise are temporary, but technological leadership that results in innovation compounding over decades is not.
“Tech trumps tariffs,” he writes.
However, those industries, Roubini argues, will continue to deliver the “exceptionalism” that has set the U.S. apart for the past 20 years, to the extent to which productivity will boost the economy out double-digits.
If potential growth rises, he says, equity returns should, too. When growth averaged only 2% over the last two decades, annual returns still hovered in the double digits. Faster growth means even faster earnings expansion, and valuations that look elevated today may be supported rather than speculative.
One of the most persistent fears around AI-driven spending is debt sustainability. But Roubini argues that this math would change if growth rises even modestly.
A tech-driven “supply shock”could also push inflation lower over time as production costs drop while productivity booms, meaning higher real rates may not translate into higher nominal yields.Even external liabilities look manageable, he argues, because rising tech investment tends to attract foreign equity inflows, similar to how “emerging-market” economies finance growth during a resource boom.
Notably, “Dr. Doom” admitted that the U.S.’s top adversary, China, is at least on par with the U.S. in innovating in the “most important industries of the future,” such as AI and robotics. However, he doesn’t seem too concerned with the AI arms race.
“The US economy and markets are best positioned among advanced economies,” Roubini wrote. “They will continue to benefit from the US being the most innovative advanced country.”
