US Exceptionalism Unlikely Now With Below Trend Growth, Says Citi's Dirk Willer

US exceptionalism is unlikely at least for the next three months as growth numbers will continue to disappoint, Citi Macro Strategy and Allocation Head Dirk Willer said. Citi forecasted 1% growth for 2025, which is less than consensus estimates.

Citi's forecast also indicates sharp slowdown from the last year. However, the brokerage doesn't see recession for the US.

Reversal of the view on US economic growth in 2025 has become clearer over the last week. In 2018, when the tariff came, the targets of the tariff had particularly underperformed. This time, the US is underperforming because of the tariff threat, said Willer.

The rationale is if the US tariffs one country, for example China, then the nations can rely on other suppliers. If the country puts tariffs on everyone—Canada and Mexico—highly integrated into the US's supply chain, it becomes the case of shooting oneself in the foot, explained Willer.

He also noted that there are a lot more negative news stories that are about to come out from the world's largest economy including those on the unemployment front.

Citi downgraded all equity views to 'neutral' from 'overweight' in February. The idea is no trader would like to go long when the tariffs are coming, he said.

Citi has upgraded China's GDP growth to 0.4%, taking into account capital expenditure on data centres and the artificial intelligence infrastructure.

"President Xi has become much more benign to private sectors, especially to AI companies. He understands that in the context of geopolitical conflict with the US, China needs to develop IT resources well. The third thing that is happening is talks of Trump wanting to travel to China and meet President Xi. It means a deal will be negotiated," Willer added.