US economic freedom surges in biggest annual increase in over two decades

• The 2.6-point increase is the largest since 2001 and second-largest in the index's 32-year history, driven by improvements in monetary freedom, government spending, fiscal health, and investment freedom
• Fiscal health remains a significant weakness with a score of 18.5 versus the global average of 65.9, due to high public debt and large deficits
• Argentina posted the largest global increase at 3.2 points under President Milei's reforms, while Singapore (84.4), Switzerland (83.7), and Ireland (83.3) led overall rankings

Summary

The United States achieved its largest annual increase in economic freedom in over two decades, according to the Heritage Foundation's Index of Economic Freedom. The U.S. score rose 2.6 points to 72.8, marking the biggest jump since 2001 and the second-largest in the index's 32-year history. This reverses a five-year decline, with the U.S. now ranking 22nd globally among 176+ countries.

Key Improvements:

The gains were driven by improvements in monetary freedom, government spending, fiscal health, and investment freedom, attributed to Trump administration tax and regulatory reforms. The U.S. ranked 3rd in the Americas behind Canada (75.6) and Chile (74.3), and well ahead of Mexico (59.8).

Strengths and Weaknesses:

The U.S. scored strongly in rule of law, with property rights and judicial effectiveness above global averages. Investment freedom and financial freedom both scored 80, significantly exceeding global averages of 53.4 and 48.1. However, fiscal health remained a critical weakness at 18.5 versus the global average of 65.9, due to high public debt and deficits. Trade freedom (67.6) also lagged the global average of 70.2.

Global Context:

Singapore (84.4) led the rankings, followed by Switzerland (83.7) and Ireland (83.3). North Korea (3.1) ranked last. Argentina showed the largest improvement globally, rising 3.2 points under President Javier Milei's economic reforms.

The Heritage Foundation attributes the U.S. gains to deregulation, tax reform, and pro-business policies that boosted private-sector growth and investment confidence.