Hi. This is Carl Tannenbaum, Chief Economist for Northern Trust. I had a primary school teacher who decided that the traditional grading system did not give her enough latitude to recognize her best students. She began offering marks of "exceptional" to work that went above and beyond. I heard about this second-hand. Bs and Cs were the most frequent entries on my report card.

For decades, the United States has been thought of as exceptional in many respects. But in recent months, some have wondered whether we are witnessing the end of US exceptionalism. While there are risks to our reputation, that conclusion may be premature.

Lofty impressions about America's economy are based on many factors. The US ranks in the top 10 globally in output per capita. Countries higher on the list are much smaller. US markets are the deepest and most liquid in the world, and the US dollar is the undisputed reserve currency. America fosters and finances innovation in a way that makes it the most productive and dynamic economy in the world.

While some of this reputation is self-generated, regard for the US has been widely held. Global investors send substantial amounts of capital to American markets, where returns have been outstanding over the past 25 years. Their use of US Treasury securities as a benchmark asset has helped finance the largest national debt in the world.

But there is a sense in some quarters that America's special standing is slipping. Annual deficits are deepening, and the US Congress shows little desire to curb them. Rising interest burdens will make it more challenging to keep the country's finances sustainable. The nation is turning inward, seeking a wholesale realignment of the global trading system. Disengagement from international commerce will create uncertainties and challenges for the American economy.

Those concerned about America's standing point to investor shifts out of US assets so far this year. But these flows have been modest and may simply neutralize past overweights. Long term growth prospects for the United States remain attractive, especially relative to other developed countries. After slumping in April, US equity markets have rallied powerfully. The United States may no longer deserve an exceptional grade from global investors, but it still tops the curve. And that's the view from here.