At a glance
- At 250 years old, the United States is the world’s most competitive economy. It generates 26 percent of global GDP and is home to 59 of the world’s top 100 firms. In the past several years, accelerating US productivity growth and announced foreign direct investment inflows have sharpened its edge over other advanced economies.
- It’s a new world. AI is unveiling an ever-expanding realm of possibilities, just as geopolitical contention is growing and fertility rates are falling. The United States is a global technology leader today and spends 27 percent of the world’s research and development dollars—but will that be enough to sustain its current 59 percent share of top firms?
- Some US historical competitive advantages are becoming liabilities. Current generations owe it to future ones to address deteriorating fiscal health, eroding infrastructure, declining educational achievement, fading manufacturing know-how, and sustained disparities in income and wealth.
- Safeguarding an economic edge requires evolving, as America has before. The United States has repeatedly adapted its economic model to meet, and then shape, new technologies and geopolitical realities. Since the country’s founding, American competitiveness has shifted but sustained across four historical chapters: agricultural, industrial, scientific, and digital. A new one is coming.
- A culture of innovation and natural abundance is an abiding strength on which to draw. By our count, Americans created or supported 76 of the 100 most important inventions since 1776, from steamboats to smartphones, from the electrical grid to generative AI. Over its history, the country has profited from twice as much agricultural land per capita as any other large economy, and it was largely self-sufficient in energy for 200 years, including since 2019. These are just a few examples of its resource wealth.
- We, the people, will write the coming chapter. Collective effort from American individuals, businesses, and government can ensure energy abundance, an infrastructure backbone, education that builds minds and skills to match new technology, and the financial strength to pay for it all. The prize is continued growth, national economic security, and economic opportunity for everyone.
Introduction
It began with a startling act of rebellion. In July 1776, delegates from 13 British colonies declared their independence, dissolved their bonds with England, threatened war, and pledged “our Lives, our Fortunes and our sacred Honor” to each other and their newly united states.
One delegate described the mood in the room as a “pensive, awful silence.” The new nation’s leaders harbored grave reservations. All were acutely aware of the potential consequences of their choice: ruin, prison, war, and death. At a remove of 250 years, it’s hard to conceive of the courage that the founders summoned as each walked to the desk and picked up the quill.
Their courage paid off. Over two and a half centuries, the country has transformed from a collection of agrarian colonies into the world’s largest and most influential economy. American firms shape global markets, accounting for more than half of the world’s market capitalization. US innovation ecosystems define the frontier of science and technology; 76 of the 100 most influential innovations of the past 250 years came at least in part from American minds and hands. Average living standards have exceeded those of any other large nation for the past 100 years, even as affordability remains an issue. By these and many other measures, the United States today is the most economically competitive country in the world.
America’s enduring economic edge was never inevitable. The United States, like most every nation, has been shaped by extraordinary difficulties—wars, recessions, depressions, and pandemics. But America has consistently come through in ways that others have not. In large measure, that’s thanks to two foundations of American economic competitiveness that it has relied on again and again: a culture of ambition and individual achievement, and a bountiful natural endowment.
Through every chapter of the past 250 years, the United States has harnessed these foundations, not in a fixed economic model but through flexible institutions that have made the next adaptation possible. And it has done so collectively. “We the people”—farmers in the fields, tinkerers in backyard workshops, teachers in schoolrooms, machinists at forges, seamstresses at machines, developers pulling all-nighters to invent world-changing code—have built an American economic powerhouse.
Today, the United States possesses immense economic strengths anchored in its twin foundations. But if history is any guide, these will carry the country only so far. The challenges are clear and present: a mounting national debt, eroding infrastructure, slipping test scores, fading manufacturing know-how, and sustained disparities in income and wealth. The question America confronts today is not how to celebrate its past but whether it can once again find a new alignment of its resources, ambitions, institutions, and policies to secure competitiveness in the next chapter of its story.
Much is at stake: individuals’ access to productive employment and affordable essential goods, businesses’ ability to scale and take risks, and the government’s capacity to raise funds and ensure national economic security.
This report examines the arc of US competitiveness, past, present, and future. America’s history of reinvention holds compelling lessons as the nation confronts a future of immense, if uncertain opportunity.
Chapter 1.
At 250, the United States is the world’s most competitive economy
Over the course of 250 years, the United States has transformed from a small agrarian economy to the world’s leading economic power, a position it has enjoyed for more than a century. Today, it has the highest income of any populous country.
American firms have undergone a spectacular evolution, from small textile mills in New England to world-leading industrial powerhouses to platform technology companies that shape everyday lives around the globe. American innovation, once a matter of adapting tools developed elsewhere to local settings, has gone on to set the global technology frontier. Over time, rising productivity has steadily lifted household living standards and created economic opportunities for millions.
The combination of leadership in global markets, powerful innovation ecosystems, and individual economic opportunity and prosperity can be summed up in one phrase: economic competitiveness (see sidebar ”Defining—and measuring—competitiveness”).
Today, the United States has 4 percent of the global population but generates 26 percent of GDP, and it accounts for more than 50 percent of market capitalization. It has exceeded many of its rich-country peers in labor productivity and growth, especially in recent years, when productivity has accelerated at levels unseen in other major economies. Leadership in technology also continues to underpin US competitiveness: The country is home to a plurality of the world’s top-cited scientists and has the most notable AI models. Announced annual inflows of greenfield foreign direct investment (FDI) have roughly doubled from the prepandemic period. And today, as it has since roughly 1900, GDP per capita exceeds that of other major economies.
These are cause for celebration. But there are also reasons for reflection. The United States is no longer the global leader in manufacturing and trade. Its lead on technology is narrowing amid greater competition with China. And the picture of household well-being is mixed: Although aggregate measures show high levels of income, many households feel they can no longer keep up economically, contributing to low levels of public trust.
Here we examine the hallmarks of economic competitiveness: globally leading firms, leadership in technology and innovation, and economic opportunity.
US firms lead global markets
American companies make up more than half of the top 100 firms globally by market capitalization and revenue (Exhibit 3). From start-ups to large corporations, they attract an outsize share of capital from global markets. US firms hold more than half of global public equity funding and receive more than 50 percent of global venture capital (VC) investment. These valuations are supported, at least in part, by the fact that US firms have the highest levels of productivity and rates of productivity growth among firms in G20 economies. Large US firms excel on a range of other corporate performance metrics; compared to European peers, they have 30 percent higher returns on invested capital and 50 percent faster top-line growth.
To be sure, a sizable share of US market capitalization is connected to the technology sector. Yet US firms lead across a range of sectors and are present in the upper echelons of all of them.
US market leadership is not a recent development: The United States has been the preeminent home to the world’s top companies for more than a century, even as these companies have themselves turned over. Over the past 25 years, for example, only Microsoft has remained in the top ten global firms by market capitalization. The sectoral composition has also shifted, from industrials and energy through the 1980s to almost entirely technology today.
Fundamentally, US firms’ outperformance is rooted in greater dynamism: They exhibit higher rates of labor reallocation, market entry and exit, and growth of young firms. That dynamism translates to higher national productivity growth.
US manufacturing leadership has receded
Notably, one major sector in which the United States no longer has a leading global market share is manufacturing. China began expanding its industrial capacity in the 1980s, then ramped it up on a large scale in the 2000s, surpassing the United States in share of global manufacturing output in 2010. Today, China produces nearly half of global manufacturing output, compared to 11 percent for the United States.
US manufacturing has also lost ground domestically as the economy has shifted toward services. Over the past 50 years, manufacturing’s share of both GDP and employment has declined from more than 20 percent to less than 10 percent today. This halving of manufacturing employment is equal to about 19 million jobs today. These were mostly middle-class jobs, and they have been offset by growth in high-skill jobs in the knowledge economy—for example, in technology, software and finance—along with lower-skill services jobs, such as home cleaning. Between 2000 and 2018, for example, the share of all US jobs with wages in the middle of the income distribution fell six percentage points.
The shift to services has had additional economic implications. For one, as the United States began to import the goods it consumed, it tilted from trade surplus to trade deficit. Before 1976, the United States was a net exporter; it then became a net importer, with a trade deficit hovering around 3 percent of GDP over the past decade. And over time, the United States has lost some of its capacity to produce a wide range of products—from sports shoes to smartphones, dysprosium to data processors, ships to chips—presenting questions about future resiliency. Of course, some of these products matter more for national security and future economic competitiveness than others. Today, 40 percent of US imports, worth more than $1 trillion, are considered critical, or “central to resilient, diverse, and secure supply chains to ensure economic prosperity and national security.”
Nevertheless, the United States remains the second-largest manufacturer and trading partner for the world, accounting for 10 percent of the world's total exports. With an output of $7.3 trillion, including in many of the same products or categories where it imports large volumes, and a workforce of almost 13 million, the United States retains a strong manufacturing base on which it might build capacity in industries that will become increasingly important in the future, including semiconductors, electrification, and next-era hardware such as robotics and autonomous systems.
New manufacturing capacity is more than just factories. Also needed are an educated and skilled workforce that can fill shortages in fields such as engineering; a strong national balance sheet to support the needed financing; and restored investment in infrastructure, especially for energy.
US leadership in innovation and tech continues as new pressures emerge
Continued high valuations hinge on whether recent accelerations of productivity will indeed translate to higher economic (and earnings) growth over the long term. Higher productivity growth rates, especially in recent years, have been accompanied by higher rates of business investment and R&D spending, a positive sign for long-term growth potential. The United States leads the world on R&D spending in absolute terms and, among major economies, as a share of GDP. Large US firms (those with at least $1 billion in annual revenue) have expanded their investment and R&D spending more rapidly than peers in other major economies. Compared to European peers, for example, they have 60 percent greater investment and 80 percent greater R&D intensity, and they have increased their investment and R&D at more than triple the European rate. Big tech firms drive much of this disparity.
Private-sector investment in frontier technologies exceeded $1 trillion between 2021 and 2024, complemented by more than $50 billion in federal R&D funding. The return on investment is striking: America has outperformed in intellectual property and critical technologies. The World Intellectual Property Organization ranks the United States near the top of its Global Innovation Index. And compared with other major economies, the United States has more than a tenfold lead in private investment in AI. Today, the nation leads the world in the number of notable AI models, accounting for more than half of the world’s total.
Another effect: Flourishing US knowledge ecosystems of universities and venture capital–backed start-ups attract and develop many of the greatest minds from all over the world, paving the way for ongoing success in science and technology. Today, nearly 40 percent of the world’s leading scientists, or those in the top 200,000 globally by citations, are based in the United States; no other country has more than 10 percent. Half of the scientific Nobel Prize winners over the past decade call America home.
Competition in critical technologies is heating up
Past success does not guarantee future results, of course, and the US lead in technology is narrowing as China becomes more competitive. Some are now warning of a second “China shock,” should China displace American leadership in critical technologies.
Beyond simply focusing on the gaps of the past, the United States needs to prepare for leadership in the industries that will be most important in the coming decades. Future competitiveness increasingly hinges on leadership in critical technologies, such as AI, robotics, biotechnology, quantum computing, high-performance batteries, and space-based technology.
Economically, these technologies promise great gains for profits and wages. Geopolitically, they will be critical for protecting national security; their dual-use (military and civilian) nature means firms that develop them will be on both frontiers. In all these areas, China has made rapid progress and, in some cases, has taken the lead.
In remarkably short order, China has moved from producing low-cost goods to leading the world in complex, capital-intensive industries such as electric vehicles and photovoltaics. This shift is now extending beyond manufacturing into research-intensive domains once dominated by advanced economies. In biotechnology, for example, China’s output in drug discovery has grown more than tenfold since 2013. As of 2024, China surpassed the United States in the number of clinical trials and in the count of clinical-stage molecules. Altogether, China’s life sciences industry is no longer confined to generic biologics or follow-on products, and it is now playing a leading role in generating sophisticated novel biologics.
In the domain of AI, while America still has the most sophisticated AI models, China has more robots than the rest of the world combined. The United States has approached AI as a product unto itself, focusing on screen-based text and images. China’s approach, however, has emphasized AI’s deployment in the physical world, with intelligent machines that can see, decide, and act in real time. For example, Chinese firms are integrating AI into industrial robots that learn from their environments, drones that analyze visual data onboard while in flight, and autonomous vehicles whose core intelligence runs directly inside the vehicle rather than in the cloud.
Recently, China has also established a strong presence in the realm of fundamental scientific research, advancing the frontiers of knowledge. From 2017 to 2023, China overtook the United States in most cited research in fields including machine learning, quantum sensors, advanced integrated circuit design and fabrication, adversarial AI, natural language processing, and high-performance computing (it already led in other fields, including electric batteries and advanced magnets). In some instances, China is deploying this research in practical uses with tangible output; for example, China developed the world’s first quantum satellite. Although most cities with dense populations of highly cited researchers are American, Beijing saw the largest absolute inflow from 2019 to 2023.
To lead in critical technologies in the decades to come, the United States will need not only to establish an edge in today’s emerging technologies but also to make the discoveries that uncover tomorrow’s. The nation will need to support innovation ecosystems and continue to attract—and build—talent. Currently, the United States graduates fewer engineers than China, both in absolute terms and relative to population size. Even more fundamentally, in K-12 education, the United States lags behind both its own historical record and other major economies. The 2024 National Assessment of Educational Progress showed a downward trajectory in math, science, and reading; only about a third of eighth-grade students were proficient. The Programme for International Student Assessment found that American 15-year-olds score lower on average in math than their peers in all other G7 economies.- A robust public education system rooted in general knowledge and problem-solving has been a historical strength of the United States. The question today is how to restore that advantage.
Average incomes are high, but prosperity is uneven
Beyond the scale of firms and leadership in technology, a final component of competitiveness is economic opportunity, or the extent to which growth translates to household prosperity in the form of higher incomes. Economic opportunity drives a virtuous cycle with innovation, as the potential for high incomes (and access to resources, such as start-up capital) attracts and retains top talent. Higher, broad-based wages fuel thriving consumer markets, a longtime driver of American growth. More broadly, when individuals have higher living standards, they tend to be more productive, fostering further growth.
Today, the United States remains a place of immense economic upside, producing high average incomes; no other country of ten million or more people has a higher GDP per capita (even in purchasing power parity terms). The story is particularly pronounced for Americans in high income brackets: The paychecks of the top decile of American earners are 10 to 50 percent higher than those of peers in major European economies and Canada. Perhaps less well known, Americans in the top 40 percent of income earn more than their counterparts in major European economies, and the top 20 percent earn more than their peers in Canada.
The story changes for the bottom half of the income distribution, with American incomes lagging behind those of major European economies and Canada. The bottom quintile of American incomes has been gaining ground recently, but the gap remains wide. Among major economies, the United States has one of the widest gaps in income levels between the top 10 percent and the bottom 50 percent.
This gap in income levels has grown over the past 50 years. Although all income segments have seen real growth, market incomes (wages and asset flows) have grown the most for the top two quintiles. For the bottom 60 percent of the population, more income growth has come in the form of government benefits than from wages, and the middle quintile has seen the lowest overall growth.
This disparity in wage growth has many well-researched causes. For example, as discussed, technological change and deindustrialization have reduced the availability of middle-wage jobs while expanding demand for both highly educated and low-wage workers. High returns from financial assets, meanwhile, have produced very high levels of wealth for high-income households, which tend to own more assets: The top 1 percent of wealth holders have more than $16 million in wealth per capita and collectively own 5 percent of global wealth. Others include insufficient human-capital development for many American workers and pressures from expanding global trade.
Sustained disparities in real wage growth and levels, wealth accumulation, and intergenerational income mobility have contributed to a growing sense among more Americans that they will not be able to reach their economic goals. As this sentiment takes hold, it raises the question of whether Americans’ support for public policies that promote innovation and dynamism will continue.
Structural shifts, including the movement from a manufacturing-based to a services-based economy, have also led to a growing geographic dispersion of productivity levels, seen strikingly across major US cities (Exhibit 8). Over the past several decades, some have seen relatively modest productivity growth, including those in the historical Rust Belt. On the other end of the spectrum, cities with deep knowledge ecosystems have seen extraordinary gains and continue to offer high-income possibilities. For example, in San Jose, California, GDP per capita has more than tripled since 2000 (see sidebar “What makes some cities more productive than others?”). Notably, however, the cost of living also varies by city; housing in particular tends to be more expensive in cities with higher levels of productivity and income.
The United States remains the most competitive economy in the world on a multitude of fronts. Getting to this point has not been a straight path. There were twists and turns, transformations and reinventions. Before contemplating the future, we first turn to what can be learned from the past 250 years, telling the story of four chapters of US competitiveness.
Gen Z hotel workers are expecting more. Belonging is the deal-breaker.
https://hotelsmag.com/news/gen-z-hotel-workers-are-expecting-more-belonging-is-the-dealbreaker/
The hospitality workforce has changed. Expectations have changed. And for hospitality leaders, the message is clear: people are no longer looking for “just a job.” They are looking for connection, meaning and a clear understanding of the impact they make in the workforce.
Research continues to reinforce this shift. Deloitte’s Global Gen Z and Millennial Survey consistently finds that purpose, values alignment and workplace culture are among the top factors influencing career decisions. Meanwhile, Gallup’s workplace research shows that employees who feel their work is meaningful and that they are recognized for their contributions are significantly more engaged and less likely to leave.
This isn’t simply a generational trend. The desire to feel valued and connected at work has always existed. Today’s workforce is simply more willing to expect it—and to move on when it’s missing.
In an industry defined by turnover and tight labor markets, this shift matters now more than ever.
The Retention Strategy
From the industry’s perspective, belonging isn’t a cultural initiative. It’s a retention strategy.
Hospitality has a unique advantage. The work we do already matters. Every day, teams create experiences, solve problems, care for travelers and represent their communities. The impact on the guest experience is immediate and real.
The challenge isn’t creating purpose. The challenge is helping employees see their impact each day.
In many hospitality roles, this impact happens quickly and quietly. A room turned efficiently. A maintenance issue resolved before a guest notices. A calm check-in after a long travel day. When leaders don’t connect these moments to the larger guest experience, the meaning of the work gets lost in the daily shuffle.
When roles feel transactional or interchangeable, people disengage. But when leaders consistently connect daily tasks to guest experience, team success and property performance, the work takes meaning. Pride grows, effort feels worthwhile, people stay.
At its core, belonging is the experience of three simple truths:
1. I am seen.
2. I am valued.
3. What I do matters.
This experience doesn’t come from a program or initiative but from leadership behavior. Belonging is built through small, consistent actions: recognizing someone for how they handled a difficult situation, explaining how operational performance affects the hotel’s success, asking for input, or investing time in developing someone who shows potential.
It also requires a shift in how leaders think about fairness. Fair doesn’t always mean identical: it means intentional. Different employees need different things to succeed—clarity, flexibility, coaching or opportunity. Leaders who understand their people and adjust their approach create stronger performance and deeper trust.
Measurable Impact
Gallup research shows that employees who feel recognized and connected to a sense of purpose demonstrate higher productivity, stronger customer focus and lower turnover. In hospitality, where employee experience directly shapes guest experience, belonging isn’t just a people’s strategy: it’s a performance strategy.
This is especially important as the industry continues to attract a workforce that prioritizes meaningful work and growth. Emerging talent is looking for more than a paycheck. They want to know their work matters and that they matter.
People stay where they feel connected, valued and proud of what they do. For hospitality leaders, the opportunity isn’t to launch new culture initiatives but to lead in ways that make impact visible and value unmistakable. Belonging is built through daily conversations, real-time recognition, development opportunities and how leaders consistently show up for their teams.
The path forward is practical:
- Connect the task to the guest impact
- Recognize contribution in the moment
- Develop potential before someone is “ready.”
- Lead people as individuals, not positions
In hospitality, service is delivered by one interaction at a time. That experience is shaped by how employees feel when they walk into work.
When employees feel interchangeable, they leave. When they feel seen, supported, and connected to something meaningful, they stay—and guests feel the difference.
Belonging isn’t a trend. It’s the operating system behind service, retention, and performance.
DUHC&S | Strategic Hospitality Consulting & Advisory
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