Is U.S. Exceptionalism on the Decline? Insights from Buffett and Bessent

As we look to the horizon of American economics and investment, one may wonder whether the days of U.S. outperformance are dimming. Recently, legendary investor Warren Buffett, the Oracle of Omaha, made a significant statement that resonates deeply with this uncertainty. When he announced his retirement and subsequent plans to pivot from his focus on American investments, it served as a wake-up call; even Buffett is questioning the strength of U.S. financial prowess.

In a striking contrast, only two days later at the Milken Institute Global Conference, Scott Bessent passionately advocated for a robust commitment to American investments. His confidence in U.S. economic resilience echoed the age-old belief that America’s economic trajectory can be encapsulated in five words: “Up and to the right.” This raises a compelling question: whom should investors trust? Should they lean on Buffett’s cautious pivot or Bessent’s zealous optimism? The tide of U.S. exceptionalism seems to be determined not only by financial nuances but also by personal perspectives.

The Forces Behind U.S. Investment Dominance

The last decade of U.S. investment supremacy can be attributed to three primary factors. The first is substantial fiscal stimulus. Under President Donald Trump, the Tax Cuts and Jobs Act of 2017 marked a watershed moment in American taxation. On the heels of that, President Joe Biden’s 2022 Inflation Reduction Act propelled federal spending to new heights. Notably, the U.S. budget deficit soared to almost 7.5% of GDP in 2024, outpacing other G7 nations whose average deficit stood at merely 3.7%.

With Trump’s return on the political scene, austerity policies appear increasingly distant. Recent Congressional budget resolutions signal substantial potential tax cuts alongside nominal spending reductions, projecting a staggering addition of $5.7 trillion to federal debt over the coming decade. Despite these alarming figures, the U.S. Treasury market remains surprisingly unfazed, with stable yields reflecting unwavering market confidence.

The Tech Boom: Sustainable or a Bubble?

The second pillar of U.S. outperformance lies in the realm of technology and artificial intelligence. The “Magnificent Seven” tech giants—companies like Microsoft, Apple, Nvidia, and others—account for nearly one-third of the S&P 500 Index’s market capitalization. This technological advantage positions the U.S. as a leader in several “industries of the future,” according to reputable analysts like NYU economist Nouriel Roubini. His predictions advocate for a potentially revitalized growth rate of 4% by 2030 due to robust investments in tech.

However, caution must be advised. Skeptics argue that we may be witnessing the emergence of yet another tech bubble reminiscent of the dot-com era. As Jim Chanos from Kynikos Associates pointed out, although recent tech investment contributed significantly to GDP, it eerily mirrors trends of the past, where overoptimistic spending led to catastrophic downturns.

The Dollar: Down But Not Out?

Lastly, U.S. exceptionalism has thrived on the long bull market of the dollar. From 2014 to early 2024, the dollar appreciated almost 30% against the euro, providing significant windfalls for foreign investors in U.S. assets. However, the landscape has shifted dramatically in 2025 as the dollar faces a notable depreciation, fueled by escalating international liabilities—the U.S. now holds a staggering near 90% of GDP in net international investment liabilities.

With the Biden administration showing an openness to a weaker dollar, we witness the DXY U.S. Dollar Currency Index plummeting by approximately 8% this year. This substantial decline raises fundamental concerns for foreign investors—what good is a booming U.S. economy if currency outweighs returns?

Conclusion: The Future of U.S. Investments

In the face of these complexities, is investing in U.S. markets worth the risks associated with two out of three traditional drivers of exceptionalism? For U.S. investors, the answer may lean favorably as domestic assets could still outperform on a dollar basis, bolstered by continued tech leadership and governmental fiscal impetus. Foreign investors, however, find themselves grappling with the currency conundrum amidst a fade in dollar relevance, leading many to reconsider their positions in U.S. markets.

Buffett’s recent remarks—expressing his reluctance to engage in investments tied to currencies teetering on collapse—serve as vital advice. Regardless of varying perspectives, the era of U.S. economic leadership is at a critical juncture. Understanding where you stand in this market may determine not just your portfolio’s health but also your economic future. U.S. exceptionalism isn’t just a matter of dollars—it’s a matter of perspective. Investors must navigate this complex landscape wisely.