SBI’s Recent Report on US Economy Raises Concerns Related to Trade, GDP; Know Key Details

A recent State Bank of India report has cautioned that the economic boom in the U.S. may have been an anomaly, buoyed by unsustainable post-pandemic policy measures.

The report titled as ‘US Economy Heading Towards (Un)exceptionalism?’ throws light on a series of worrying trends related to growth, productivity and investments, thereby hinting the end of so-called American economic exceptionalism.

The post-covid surge in the U.S. economy was more likely an outlier, supported by policies, SBI said. Notably, the country is already reporting incessant decline in GDP growth, declining exports, and weak consumption patterns. While adding that total factor productivity (TFP) growth and value addition are on a declining spree, the report notes that “The jump in the US economy post-COVID may have been an outlier as a result of policy extravaganza.”

The report further raised concerns about slowing net savings to GDP ratio that dropped to its lowest level since 2011, while debt-to-GDP ratio has shot up. Employer costs have averaged $31.47 per hour in December 2024. Meanwhile, manufacturing sectors are struggling to attract investments to achieve long-term growth.

Donald Trump’s 25% tariff on steel and aluminum imports from March 13 could further dampen investor sentiments globally.

Additionally, the U.S. markets have fallen significantly from their recent highs. The markets have reported correction after clocking a staggering $52.9 trillion market cap for the S&P 500 as of February 2025. “Markets, including the US, are appearing to have run out of breath, trimming all intermittent gains as investors increasingly question earnings guidance against persistent volatility.” Even giants like the “Magnificent Seven” stocks, often seen as bulletproof, are starting to show cracks under the strain of economic uncertainty and geopolitical risks.

On the GDP front, Atlanta Fed’s GDP Now model slashed its growth estimates for Q12025 to -2.4% from +2.9% projected earlier. “US economic growth is sliding in the last one year,” SBI writes, citing GDP growth dropping from 3.2% in Q4 2023 to 2.5% in Q4 2024.

Notably, the SBI report highlights that despite America’s economic turbulence, India can cash in on various opportunities. As the US and other developed economies face slowdowns, India’s diversified export base, active pursuit of free trade agreements, and robust domestic consumption could help it attract capital and market share. India has signed 13 FTAs in the last five years, including with major partners like the UAE and Australia, and is actively negotiating new deals with the UK, Canada, and the EU.