Germany’s economy—a powerhouse known for efficiency, skilled labor, and high-end manufactured exports—has struggled lately. Anemic growth could unfortunately be the norm in coming years, because of three structural challenges: an overreliance on external demand, unfavorable demographics, and stagnant productivity.

The U.S. economy has had a remarkable run—strong growth, full employment, moderating inflation, and solid market returns. In this short video, Vanguard Global Chief Economist Joe Davis discusses whether that momentum can continue in 2025.

Positive after-inflation returns will likely prevail, but tension grows between momentum and valuation for equities.

Vanguard’s annual economic and market outlook was recently released. Favorable supply-side factors including a surge in both available labor and productivity have helped the U.S. see exceptionally strong growth combined with falling inflation. But will that momentum last?