The US-EU economic divergence since 2008 is one of the most significant developments in the Western economy. In the early 2000s, US and EU GDP were roughly comparable. Today, the US economy is over 30% larger, and the gap continues to widen. This divergence has profound implications for transatlantic relations, European strategic autonomy, and the global economic balance of power.
The primary driver is productivity, particularly in technology. The US tech sector (Apple, Microsoft, Google, Amazon, Meta, Nvidia) has created more value than the entire GDP of many European countries. Europe has no equivalent to Silicon Valley, and attempts to create one have repeatedly failed. The reasons are debated: European capital markets are fragmented, labor mobility is limited by language and culture, and risk tolerance is lower in both venture capital and entrepreneurial culture.
Immigration has been another divergence factor. The US absorbs roughly one million legal immigrants annually (plus significant unauthorized immigration), providing both labor supply and entrepreneurial dynamism. European immigration, while significant, has been more politically contentious and less economically integrated. An estimated 40% of Fortune 500 companies were founded by immigrants or their children.
Energy is the third wedge. The US shale revolution made America the world's largest oil and gas producer, providing cheap energy for industry and insulation from global energy price shocks. Europe, dependent on Russian gas and imported LNG, paid 3-4x American prices during the 2022 energy crisis, devastating energy-intensive manufacturing.