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Goldman Sachs and JPMorgan urge investors not to lose faith in US market and economic exceptionalism this year.
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US GDP reached nearly $30 trillion in 2024, far surpassing the eurozone and China.
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A risk-taking culture, geographic advantages, and strong consumer spending drive US economic dominance.
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.