Bank of Korea: "Population, Restructuring, AI... Driving U.S. Exceptionalism"

Influx of young population, increase in labor productivity, etc.

Largest economic growth among developed countries

Stronger economy than expected with Trump tariffs

Wall Street IBs forecast more conservative rate cuts next year

An analysis has emerged that the U.S. economy, showing remarkable growth among developed countries, is driven by the continuous influx of young population, active restructuring, and vigorous investment in artificial intelligence (AI).

The Bank of Korea's New York office held a briefing on '2025 U.S. Economic Outlook and Key Issues' at its Manhattan office on the 23rd (local time) and explained this.

U.S. Real GDP Grows Significantly

The Bank of Korea's New York office, using data from asset manager RiverFront Investment Group, stated that the U.S.'s real gross domestic product (GDP) last year recorded 111.1 when 2019 is considered 100. In contrast, France and the UK were at 102.1, Japan at 100.5, and Germany at 100.4. According to the International Monetary Fund (IMF)'s October forecast for this year's economic growth rates, the U.S. stands at 2.8%, significantly higher than Canada at 1.3%, Germany at 0%, the UK at 1.1%, and France at 1.1%.

The Bank of Korea's New York office cited a stable population structure as a factor for the U.S. economy's stable growth. According to the United Nations' population estimates, the U.S. population growth rate was 0.4% in 2022, 0.6% in 2023, and 0.6% in 2024. As a result, the U.S. population is estimated to be about 345 million in 2024. This contrasts with Europe and Japan, where populations are declining. Looking at the working-age population (ages 15-64), the U.S.'s working-age population ratio is 65.2% on average from 2020 to 2024, ahead of Europe (64.6%) and Japan (58.8%). The increase in immigration and refugee inflows after the COVID-19 pandemic is also affecting the increase in the labor force in the U.S.

Restructuring Leads to Labor Movement and Reallocation

U.S. labor productivity is also a driving force for economic growth. Since 2022, labor input hours have been higher than before the pandemic, yet high productivity is maintained. The Bank of Korea's New York office analyzed, "During the pandemic, natural restructuring of low-productivity sectors occurred, leading to the movement and reallocation of labor to high-productivity sectors."

In fact, Joseph Politano, a well-known U.S. economic analyst and data journalist, stated that when labor productivity in each developed country is set at 100 in 2015, U.S. labor productivity rose to around 115 by the third quarter of 2024. In contrast, the UK was around 107, and France barely exceeded 100.

The rapidly adopted artificial intelligence (AI) technology is also estimated to have positively impacted U.S. productivity improvement. Private investment in AI in the U.S. has been sharply increasing since 2017. Unlike other major countries where investment volume decreased, it increased by 22.1% year-on-year in 2023, reaching $67 billion.

Wall Street IBs Forecast More Conservative Rate Cuts Next Year

Meanwhile, the Bank of Korea's New York office reported that New York Wall Street investment banks (IBs) are reducing the rate cut forecast for next year, reflecting the tariff policies of U.S. President-elect Donald Trump. They believe that if import prices rise due to tariff increases, it could reignite inflation. Among the top 10 investment banks (IBs), Barclays, Bank of America, and Morgan Stanley forecast that the U.S. Federal Reserve (Fed) will cut rates by 0.5 percentage points next year, the same as presented in the Fed's December Summary of Economic Projections (SEP).

Deutsche Bank proposed a 'no cut' scenario where rates will not be cut next year. Goldman Sachs, JP Morgan, and Wells Fargo forecast a 0.75 percentage point cut, while Citigroup forecasts a 1.25 percentage point cut. TD Bank, headquartered in Canada, expects a 1 percentage point cut. The Bank of Korea explained, "The differences in the Fed's policy path forecasts among institutions have widened."

New York = Park Shin-young, Correspondent nyusos@hankyung.com