The US economy and stock market are poised for continued dominance in 2025, according to leading Wall Street institutions Goldman Sachs and JPMorgan. Both banks urge investors to maintain faith in American exceptionalism and its long-term growth potential.
alt text: Graph comparing projected GDP growth between United States, Eurozone, and China in trillion USD
Goldman Sachs, in its 2025 outlook, emphasizes the US as the “largest, most diverse, innovative, and resilient economy globally.” This assertion is supported by the nation’s near $30 trillion GDP in 2024, dwarfing the Eurozone’s economy and significantly surpassing China’s. Furthermore, the combined value of US stock and bond markets reaches $79 trillion, eight times larger than Japan’s, the second largest market.
Despite these impressive figures, some investors question whether US dominance has peaked. Both Goldman Sachs and JPMorgan firmly believe it has not. Goldman Sachs points to several key factors driving American exceptionalism: a culture of risk-taking and entrepreneurship, geographic advantages including vast natural resources and protective oceans, and a robust system of governance with checks and balances. These factors support Goldman’s strategic overweighting of US assets and its recommendation to remain invested in US equities.
alt text: Chart showing a comparison between US GDP growth vs China and Eurozone in 2024.
In 2024, the US further solidified its economic lead, expanding its GDP by $1.4 trillion – 50% more than China and 126% more than the Eurozone. Goldman Sachs contends that this widening gap makes it unlikely for China to ever match US GDP and advises investors to increase their allocation to US stocks to 79% of their portfolio, a 12 percentage point overweight relative to the MSCI All Country World Index.
JPMorgan reinforces this optimistic outlook, highlighting American exceptionalism as a key investment theme for 2025 and beyond. The bank notes that the US is the only major economy to return to its pre-pandemic potential growth trajectory. US real GDP is currently nearly 4% above its pre-pandemic path, while the rest of the world lags behind with a negative gap exceeding 1%. China’s underperformance is particularly notable.
alt text: Chart comparing US Real GDP to its pre-pandemic potential path from 2018 to Q2 2025
JPMorgan attributes this strong growth to a “newfound business dynamism” spurred by the COVID-19 pandemic, citing shifts in work patterns, such as the rise of remote work, and a surge in new business formations. The bank anticipates continued easing from the Federal Reserve and a stable unemployment rate will further fuel US economic growth in 2025.
Finally, both institutions emphasize the crucial role of the American consumer. US consumer spending significantly outpaces global counterparts, driven by a behavioral optimism reflected in declining household saving rates. This contrasts sharply with rising savings in Europe, despite both regions having the lowest household debt ratios. This robust consumer spending, coupled with the factors outlined above, paints a picture of continued US economic strength in the coming years. JPMorgan believes that a second Trump Administration will further boost this American exceptionalism narrative.
