Are you generally optimistic or pessimistic about U.S. economy right now for starting up?

Fundamentally, startups thrive in economies that grow. In a high growth economy, there are changing demands that can be filled by startups. In a low growth economy, start ups are in zero sum environments, competing with incumbents for the same pool of wealth, demand, customers, etc

I believe the US economy will see higher growth than similarly developed countries over the next decade due to

1. Younger workforce than most other countries
2. A more stable economic structure
3. A more friendly regulatory environment.

The younger workforce has mostly been driven by progressive immigration policies, and even with the recent changes to immigration, the US still accepts far more immigrants than countries like Japan or China that all face declining birth rates and shrinking populations that will hamper economic growth for many years to come.

The symbiotic relationship that exists between the US central bank and the federal government has allowed for much more flexibility in spending and borrowing and provides credibility to the American economy. The US has demonstrated an ability to quickly pass massive spending bills and run huge deficits in times of crisis, with the assistance of the central bank purchasing bonds.

Contrast this with the challenges the EU faces with an independent central bank that has shown to be willing to push countries to the brink of default, as we saw during the Greek debt crisis. This has resulted in EU nations being overly cautious and constantly falling into austerity in times of crisis, and conservatism in times of growth.

Germany for instance has negative (!!) bond yields, and yet the German government still consistently runs a budget surplus, even as its populous struggles with outdated infrastructure and low speed internet. Economists have theorized convincingly that it’s due to a lack of trust that the ECB will act as a backstop in times of crisis, so borrowing too much is too risky, creating an excessive need to “save for a rainy day”.

We’ve seen first hand the US able to better weather the impacts of the 2008 and 2020 global economic shocks while many EU nations have struggled, even today, to recover from the 2008 recession (unemployment in Greece is still over 15%, in Italy it hovers at 10%, Spain > 10%, etc).

Finally, the US, perhaps due to congressional gridlock, has created more stable regulatory environment relative to peer countries. Chinese and European seem to play a heavier hand in new, and upcoming markets such as cryptocurrencies, gig economy and social media compared to the US.

Strict regulations tend to have the effect of entrenching incumbents and discouraging potential entrepreneurs. I witnessed first hand the difficulty in becoming HIPAA and HI-TRUST compliant as a heath-tech company. If it wasn’t for a relaxing of the rules during COVID, it would’ve taken us over a year just to get to market. Now imagine if the similar laws were applied to every sector of the economy.

In general what this means for US startups is:

1. Better access to talent and workers abroad due to immigration
2. A higher workforce participation rate due to a younger population
3. Greater access to liquidity and capital
4. A more predictable and stable regulatory environment