The Engine of US Growth: Labor Productivity

While factors like technological innovation, robust research institutions, and abundant natural resources are often cited, a key driver of US economic outperformance lies in its remarkable labor productivity. this efficiency, where companies achieve more with fewer resources, is a critical advantage in today’s global landscape.

Over the past decade, the US equity market has consistently outperformed its international counterparts. Since 2014, the S&P 500 has delivered an average annual return of 12.5%, significantly exceeding the 4.4% return of the MSCI World index (excluding the US). In the last year alone, the S&P 500 surged by 24.5%, marking the fourth instance since 2019 of gains exceeding 20%. This sustained growth is fueled by a combination of factors, including a strong entrepreneurial spirit, advanced research infrastructure, a world-class education system, respect for the rule of law, and ample natural resources.

Between 1995 and 2019, US labor productivity increased by 50%, averaging 2.1% annually. In contrast, the Eurozone saw a productivity increase of onyl 28%, or 1% per year, during the same period.This advantage has widened as the COVID-19 pandemic. From Q4 2019 to Q2 2024, US labor productivity grew by 6.7%, compared to a mere 0.9% in the european Union. In an era of declining global birth rates and slowing population growth, this productivity edge is a vital sign of US economic resilience, reinforcing the belief that the US economy can continue to thrive.

Beyond Political rhetoric: Identifying Growth Opportunities

The potential return of President Trump, with promises of tax cuts and deregulation, coupled with the rapid advancement of artificial intelligence (AI), has boosted investor optimism regarding US equities in 2025.However, investment decisions should be grounded in fundamentals, not solely on political promises or the hype surrounding specific sectors like AI.

the vast US market offers diverse growth opportunities across various industries, extending far beyond the “Magnificent Seven” tech giants. From construction and automated medical procedures to animal healthcare, the potential for expansion is meaningful.

Infrastructure Investment: Building Tomorrow’s America

Years of neglect have left the US infrastructure network (roads, railways, airports, and bridges) facing significant challenges and lagging behind other industrialized nations. The American Society of Civil Engineers gave US infrastructure a “C-” grade in 2021, citing inadequate roads, deficient infrastructure, and an aging electrical grid. Currently, one in three bridges needs replacement or repair, and 20% of air arrivals and departures are delayed due to congested airports.

However, thes challenges are now being addressed with increased investment and bipartisan support aimed at revitalizing the nation’s infrastructure. The Bipartisan Infrastructure Law, enacted in 2021, allocates billions of dollars to modernize roads, bridges, public transit, water infrastructure, and broadband internet access.

Furthermore, internal and international migration patterns are placing increasing strain on the existing infrastructure. Between 2023 and 2024, the US population grew by nearly 1.0%, the fastest rate since 2001, driven by a surge in net international migration. Southern and western states like Florida, Texas, Nevada, and Utah are experiencing the most rapid growth.

Strategic Investment: Vulcan Materials as a Case Study

These infrastructure challenges present significant opportunities for long-term investors, notably in the construction sector. Companies like Vulcan materials Company, the largest producer of construction aggregates (sand, gravel, and stone), are well-positioned to capitalize on the growing demand for infrastructure growth.

Founded in 1909 in birmingham, Alabama, Vulcan Materials controls essential transportation routes via barge, rail, and truck. The company has a strong presence in the rapidly growing Southern and Western US, including 35 of the country’s fastest-expanding cities.

Vulcan Materials is also benefiting from the rise of artificial intelligence, participating in the construction of data centers and factories. Additionally, the company is capitalizing on reshoring trends and the growth of renewable energy solutions.

Our US Equities strategy aims to exploit this efficiency by focusing on the companies that obtain more with less resources.

Comgest Growth America fund manager