Understanding the Market Shift: US vs. Other Economies
Over the past 25 years, a clear pattern has emerged in global markets. Recent data (see the image below) has shown how US markets have performed compared to other developed economies, including regions like Hong Kong, Iceland, Canada, Australia, Singapore, the UK, and more—excluding the US itself. One thing is evident: for the last 15 years, the US has been leading the way.
Source : Econovis on X
How the US Pulled Ahead
The US’s strong performance is no accident. Following the 2008 financial crisis, the US maintained very low interest rates—almost at zero. These near-zero rates allowed American companies to borrow money easily, grow faster, and invest in innovation. As a result, the US market expanded significantly more than other markets.
A Natural Demand for US Assets
Another key factor contributing to the rise of the US market is the global demand for US dollars. Many countries conduct trade in dollars. When they sell goods or services to the US, they receive payment in dollars. Often, these dollars are reinvested back into the US economy, typically in the form of investments. For example, if Switzerland sells watches to the US and receives dollars, they often invest that money into US stocks or bonds. This continuous flow of dollars back into the US market creates a natural demand for US assets.
A Possible Change in Direction
However, we may be witnessing a shift in this trend. As globalization begins to wane and the dominance of the dollar is questioned, there is a possibility that the performance of the US market might reverse. This could mean that other global markets, including emerging markets, may start to outperform the US.
Looking at Past Trends
A similar shift occurred between 2003 and 2008 when many non-US markets outperformed the US. We might be entering a new cycle where markets outside the US could see more significant gains. This observation is also supported by other studies, indicating a growing interest in emerging and non-US markets.
Have you always focused only on US markets? It’s time to look beyond! Share your thoughts in the comments below. If you found this blog helpful, don’t forget to SHARE it with your friends and family!
