Will The U.S. Market Maintain Its Global Leadership Beyond 2025?

In 2025 global investors endured pronounced volatility. U.S. equities experienced a sharp decline followed by a robust rebound, the dollar weakened unexpectedly, sovereign and corporate debt burdens rose, and international trade tensions intensified. These developments have prompted a central question among market participants: does the United States remain the safest investment destination, or is it merely the least risky option by comparison?

The answer will hinge on three interrelated forces: the continued concentration of capital in technology, the resilience of U.S. institutions and regulatory frameworks, and the growing prominence of fiscal policy relative to monetary policy. To date, the U.S. market retains a commanding position. Since the 2008–09 global financial crisis, U.S. equities have outperformed other markets by roughly seven percentage points in annualized returns. Approximately two‑thirds of global listed equity market capitalization is domiciled in the United States, and U.S. assets likewise dominate private markets, including private equity, credit and venture capital allocations.

Two factors underpin this dominance. The first is technological leadership. The United States has become synonymous with transformative technologies — from artificial intelligence to cloud computing and semiconductors — and with platform companies capable of scaling globally. The second factor is institutional: historically, U.S. capital markets have operated within a predictable, enforceable and impartial legal and regulatory environment, reflected in market openness, exchange depth and judicial authority.

When those institutional pillars show signs of strain, however, the implications can be significant. Market behavior this year offered an early warning. Following the administration’s April tariff announcement, U.S. markets experienced a simultaneous deterioration across equities, bonds and the dollar — a “triple alarm” reminiscent of the 1970s, when economic instability, political turmoil and an energy shock coincided. Although markets recovered by May, such episodes can presage deeper structural stress; past market calm has sometimes masked vulnerabilities that later surfaced, as seen before the 2007–08 crisis. Prudent investors therefore monitor early fissures beneath apparent stability.

A further challenge to U.S. preeminence is the shift toward fiscal dominance, in which fiscal pressures constrain monetary policy. The United States faces tangible debt dynamics: federal interest payments now exceed defense expenditures. Last year the U.S. crossed the threshold described by historian Niall Ferguson’s rule of thumb, which suggests a great power risks losing its status when debt‑service costs surpass defense spending. Other advanced economies are not immune to fiscal strain. Japan’s new leadership confronts mounting fiscal challenges and weak growth; France has cycled through multiple prime ministers since 2024 amid fiscal stress; and the U.K. faces difficult trade‑offs between unpopular tax measures and a heavy debt burden. Each of these markets contends with elevated debt and uncertain fiscal trajectories.

Against this backdrop, the United States still stands out. Despite fiscal and institutional uncertainties, capital continues to flow into U.S. markets, largely because the technology sector continues to deliver outsized returns. Technology represents roughly 35% of the MSCI USA Index, compared with about 8% in the MSCI EAFE Index covering Europe, Australasia and the Far East. Consensus estimates project long‑term per‑share earnings growth of about 15% for U.S. equities versus 11% for EAFE markets.

Technology functions as the large‑cap growth engine sustaining U.S. market leadership. Since 2009, U.S. market capitalization has expanded by approximately USD 50 trillion, with roughly 75% of that increase attributable to just 150 stocks — about 3% of all listed U.S. companies. Over the same period, per‑capita revenue among large U.S. firms roughly doubled, while comparable metrics in Europe and Japan stagnated. Many of the largest U.S. companies have sustained extraordinary growth for far longer than historical norms, challenging traditional value‑oriented investment approaches.

Institutional investors frequently express a desire to reduce U.S. exposure — not out of disbelief in corporate fundamentals, but due to concerns about the broader financial and political architecture. Yet viable alternatives remain limited, so many investors retain substantial U.S. equity positions while hedging currency risk.

The current juncture is a test of fiscal capacity, institutional resilience and the concentration of technological leadership. Investors are responding pragmatically: they continue to participate in the technology‑led upside while closely monitoring political and policy developments that could alter the risk‑return calculus.