The end of American exceptionalism goes way beyond Trump

MANY of the same people who hyped the election of Donald Trump to the White House as a huge boost for “American exceptionalism” now see the recent decline in US stocks and the dollar as a sign that this era of US dominance is under threat. They tie this sudden turn to Trump, too. If it were not for the daily dramas in Washington, they seem to think, US markets would still be running away from the rest of the world. 

The bubble in American exceptionalism, however, long predates Trump’s second term. After building in global markets for years, it showed classic signs of climaxing following his election, when many seemed convinced that the new president’s policies would attract even more capital to the US.

But such irrational exuberance was bound to pop on the first sharp pin. If not the tumult of Trump’s early days, then some other shock would have provoked investors to rethink their record high allocations to US assets.