The writer is chief market strategist for Europe, Middle East and Africa at JPMorgan Asset ManagementWhile the US economy showed extraordinary resilience last year, Europe has had a tougher time of it with growth stagnant, at best. But, I would argue, expectations for Europe are now far too low. This underperformance stems in large part from the ripple effects of Russia’s invasion of Ukraine and the ensuing energy crisis. Losing its main supplier of natural gas, Europe faced a colossal shock. Spiralling bills hit households, permeating through the price of other goods and services, as businesses passed on higher costs.

While energy prices rose globally in 2022, the cost of living crisis has been much more painful and prolonged in Europe. Consumer confidence followed the drop in household spending power and so, despite both US and European households having sizeable pandemic-related savings, Europeans chose to hoard those savings. By contrast, US consumers put those savings to work, making up for the experiences and holidays lost during the pandemic.

Fiscal policy was another source of divergence between the two regions. Across the Atlantic, the American Rescue Plan, the Chips Act and the Inflation Reduction Act have played a significant role in driving growth. Indeed, it is important to not overlook the fact that the recent growth resilience we have seen in the US is at least in part down to government spending, with the budget deficit running at 6 per cent of gross domestic product.