By America’s economic and stock market dominance will continue in 2025.
That’s according to two of Wall Street’s biggest banks, which said this month that investors should continue to bet on America.
America represents “the largest and most diverse, innovative and resilient economy in the world,” Goldman Sachs’ wealth management group said in its 2025 outlook note.
To illustrate that dominance, Goldman highlighted that US nominal GDP approached $30 trillion in 2024, nearly double the size of the Eurozone economy. Meanwhile, America’s stock and bond market is worth $79 trillion, eight times as large as the next country, Japan.
With numbers so large, it’s natural for investors to question if US dominance has peaked and whether they should reallocate their investment portfolios to international stocks and bonds.
The answer is a resounding no, according to both Goldman and JPMorgan.
Goldman Sachs highlighted various forces that continue to underpin American exceptionalism, including its cultural tenacity for risk-taking and entrepreneurship, its geographic advantages of having oceans on two sides of the country and vast natural resources, and its “good governance” system that is marked by a robust system of checks and balances.
“These factors have underpinned our strategic overweight to US assets and our tactical view of staying invested in US equities rather than reallocating assets to non-US equities or bonds and cash,” Goldman Sachs said.
America widened the gap between peer economies again in 2024 by growing its GDP by $1.4 trillion. That’s 50% and 126% more than China’s and the eurozone’s GDP growth last year, respectively.
“Given this growing gap, even China does not catch up to the GDP of the US — ever,” Goldman Sachs said.
Goldman Sachs recommends investors increase their allocation to US stocks. The bank had previously recommended a 74% weight to the asset class, but bumped that exposure to 79%, representing a 12 percentage point overweight relative to the MSCI All Country World Index.
JPMorgan echoed these sentiments in a recent note, highlighting the top investment themes it sees for 2025 and beyond, adding that the American exceptionalism narrative is set to receive a boost from a second Trump administration.
The driving factor behind JPMorgan’s bullishness is the fact that America is the only economy in the world to return to its pre-pandemic potential growth path.
“US real GDP currently stands nearly 4%-pts above its pre-pandemic potential path, while the RoW maintains a greater than 1%-pt negative gap,” JPMorgan said, adding that China’s underperformance has been the most severe.
The strong growth has been driven by a “newfound business dynamism” that was kickstarted by the COVID-19 pandemic, JPMorgan said. The bank highlighted that changes to work patterns, like remote work, and a boom in new business formations have been a boon for sustained economic expansion.
The bank expects continued easing from the Federal Reserve and a benign unemployment rate to also propel the US economy forward in 2025.
Finally, the US consumer has stood out as a driver of the economy relative to global peers.
“US consumer spending is outsized compared to the rest of the world,” the bank said. “The behavioral optimism reflected in a decline in US household saving rates contrasts sharply with the caution seen in rising European savings, even as both the US and EMU boast the lowest household debt ratios.”
JPMorgan
