At our weekly company-wide meeting on July 6th, our Vice President of Wealth Management, Mike Sullivan, gave a fantastic presentation on the qualities that have made the United States one of the world’s most successful economies over the past 250 years. His message wasn’t that America is perfect. Rather, it was that few countries in history have created an environment that consistently rewards innovation, entrepreneurship, and long-term investment.
His presentation reminded me of a great quote from Warren Buffett’s 2020 shareholder letter: “Never bet against America.” Buffett expanded on that thought by writing that there has never been another “incubator for unleashing human potential like America.”
The data certainly supports his argument.
America by the Numbers
- Over the past 250 years, the United States has become the world’s largest economy, now approaching $32 trillion in annual GDP. It represents roughly 26% of global GDP despite accounting for only ~4% of the world’s population.
- The U.S. accounts for nearly half of the world’s public stock market capitalization, totaling more than $80 trillion.
- The U.S. dollar remains the world’s dominant currency, appearing in 89% of all foreign exchange transactions and representing approximately 57% of global foreign exchange reserves.
- The United States has developed the deepest and most diverse capital markets in the world, giving entrepreneurs access to venture capital, private equity, public markets, and other sources of financing. This allows innovative businesses to invest for years before becoming profitable.
- The U.S. consistently ranks among the global leaders in research and development spending, venture capital investment, and technological innovation, helping create entirely new industries over time.
- Many of the world’s leading universities are located in the United States, attracting talented students and researchers from around the globe while serving as hubs for scientific discovery and entrepreneurship.
- Strong institutions, well-defined property rights, and the rule of law have helped create an environment where businesses and investors are willing to commit capital for the long term.
- Productivity growth has been one of the primary drivers of rising living standards, corporate earnings, and long-term stock market returns.
- The United States is the world’s largest producer of both oil and natural gas, providing a reliable and abundant energy supply that supports households, manufacturers, and economic growth.
- Since 1928, the S&P 500 has generated approximately a 10% annualized total return. While the journey has included wars, recessions, inflation, political turmoil, and financial crises, patient investors who stayed invested have been rewarded over the long run.
America’s greatest strength has never been that it avoids challenges or that it is without flaws. Throughout its history, the country has faced wars, recessions, political division, inflation, financial crises, pandemics, and countless other obstacles. Today is no different, with issues such as our growing structural fiscal deficits and the opportunities and uncertainties presented by artificial intelligence. Yet time and again, America’s ability to adapt, innovate, and continually reinvent itself has proven to be its greatest competitive advantage. As investors, that’s one of the reasons we remain optimistic about the long-term prospects for American businesses. America has accomplished a remarkable amount in its first 250 years, and we believe patient, long-term investors will continue to be rewarded in the years ahead.
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