US market dominance: what 250 years tells investors
US markets have shaped global investing for decades. Richard Champion, Co-Chief Investment Officer, explores the forces behind their dominance – and why understanding them matters for investors today.
Co-Chief Investment Officer
30 Jun 2026
|Quick summary
The United States has dominated global investing for decades. Today, a large part of many portfolios is tied to it, often more than investors realise through pensions, ISAs and other savings.
But that dominance didn’t happen by chance. Richard Champion, Co-Chief Investment Officer, explains how understanding that story illustrates not just why the US still leads, but whether it always will.
How did the US economy grow so quickly?
The US grew faster than its rivals - in people, land and resources - creating a larger economy and deeper markets that helped drive long-term growth.
What are some of the downsides to the powerful US economy?
US markets have often seen rapid growth followed by overconfidence. When expectations run ahead of reality, prices can overshoot - creating both opportunities and risks.
Why is the US so good at innovating?
The US has consistently turned new ideas into global businesses, supported by capital markets that fund growth - helping companies scale faster and command higher valuations.
How did the US overtake the UK as a global leader?
The US moved from a catch-up economy to the dominant global power, supported by greater scale, stronger productivity and the ability to adapt across industries.
What could challenge the dominance of the US market?
Rising government debt and higher borrowing costs are key risks, even though strong global demand for US assets has helped support markets so far.
Why do US markets matter to investors everywhere?
Because of their size and influence, what happens in the US often shapes markets globally - meaning it can directly affect how investments perform.
Over 250 years, US markets have shown a remarkable ability to create and sustain wealth. From funding early government debt, to financing everything from coal, railroads, oil and now software and artificial intelligence (AI).
Several factors have helped drive that success. Ultimately, it came down to scale, capital and innovation - giving US companies the ability to grow faster than their global peers such as in the UK.
For investors, the impact is clear. The US has become the most influential stock market in the world - and today it plays a central role in many investment portfolios, often more than clients realise.
To understand how that dominance developed, it’s worth looking at the key forces behind it.
How the US became the world's dominant market
From a historical context, the US became the biggest economy in the world because it grew faster - in people, scale and resources - than its rivals.
Although smaller than the UK at independence, the US’ population has expanded rapidly over time. Today it has around 349 million people compared with just under 70 million in the UK, helping to underpin its economic and market dominance.
The US also expanded its territory across the 19th century rapidly. By its 150th anniversary in 1926, the territorial US was very different from the country of 1776 and much closer to the country of today - with the UK around 37 times smaller for comparison.
The story of US capital markets over the last 250 years is therefore a story of enormous population growth and vast territorial expansion, alongside the mobilisation of people and money in pursuit of innovation and wealth creation.
The risks behind US market dominance
The openness that has made US capitalism so dynamic has also made it vulnerable to excess.
Throughout its history, strong growth has often been followed by episodes of overconfidence - from early banking crises and industrial booms to the dot-com bubble and the financial crisis. A clear pattern has emerged: when capital is abundant and expectations run ahead of reality, markets can overshoot.
For investors, this matters. These cycles are not a flaw of the system, but part of how it works: creating both opportunity and risk. The current surge in AI investment may, in time, be viewed through the same lens.
If excess is one side, entrepreneurialism and innovation are the other.
Why innovation keeps US markets ahead
Since the Second World War, no other economy has combined research universities, defence spending, venture capital, immigration, technology, consumer scale and public equity markets as effectively in support of commercial invention.
The post-war US created not only dominant industrial champions but entirely new sectors: aerospace, biotech, enterprise computing and more recently, the modern AI stack. Right now, at its summit sits NVIDIA, a US$5trn market cap company and individually, Elon Musk, the world’s first trillionaire.
Silicon Valley is only the most visible expression of the ability to convert science into investable companies and then into globally dominant franchises.
American equity markets have rewarded that process by granting high valuations to future growth, allowing firms to fund long-duration innovation more easily than many peers abroad.
For investors, this helps explain why US stocks have consistently attracted higher valuations and they are often seen as more ‘expensive’.
From follower to leader
A long-run comparison with Britain is especially instructive in showing how dominant the US has become.
In 1776, the UK was the richer, more financially sophisticated and more powerful economy, with London at the centre of global finance. For much of the next 150 years, Britain remained the world’s leading industrial and financial power.
Over time, however, that balance shifted decisively. The US moved ahead of the UK and the gap has widened significantly in the modern era.
The story of steel production is a good example of this reversal. The US started well behind the UK, overtook it in the late 19th century and went on to dominate for decades, before competition from Japan, Korea and, more recently, China emerged.
The graph below shows how UK vs. US steel production has evolved over time. It estimates the production of iron and steel from both countries between 1775 and 2025. This is to demonstrate the change in economic might from the UK to US.
Estimated US vs. UK iron and steel production - 1775 - 2025.
Source: Canaccord Wealth, House of Commons Library, WorldSteel.org, Tokio Marine and Trading Economics.
What could challenge US market dominance?
However, balance is essential.
Today, US government debt has risen significantly and higher interest rates mean the cost of servicing that debt is becoming more important.
So far, the US has been supported by strong global demand for its assets and the US dollar’s role at the centre of the global financial system - but these strengths don’t remove risk, they could simply delay it.
How US markets shape the rest of the world
When excess emerges in the US - whether big government debt or stock overvaluation among others - it rarely stays contained within US borders. Because of the US’s size and influence, its markets help set the tone for how companies are valued and how investors behave globally.
Problems that begin in the US therefore transmit quickly into fixed income and equity markets elsewhere, including Europe, the UK and emerging markets. That is another measure of US primacy: its successes lift the world, but its excesses can unsettle it, famously expressed as, ‘when the US sneezes, the world catches a cold’.
The last 250 years have been extraordinary for US assets. With the depth of US entrepreneurial culture and the genius of its technology titans, it is entirely possible that the coming decades will see still more evidence of the seemingly endless capacity of US capital markets to adapt.
With an annualised real return of around 6–7% over the long term, even small amounts invested in the US stock can grow significantly over time. Over multiple generations, US$1 invested hundreds of years ago could have grown into millions in real terms - highlighting just how powerful compounding has been.1
1 Long-Run Asset Returns: A Deep Dive into Historical Real and Nominal Returns
How exposed are your clients to US markets?
US markets have been a powerful driver of long-term returns, but their growing influence can also introduce certain risks within client’s wealth.
As exposure has increased - often without it being a deliberate decision - supporting clients to understand and review that balance is increasingly important.
We work alongside professional advisers to help clients understand their exposure and consider how best to manage it over time
Frequently asked questions about US market dominance
US market dominance means the US has a significant influence on global investment performance. Many investors have exposure to US markets through pensions, ISAs, funds and other investments, even if they have not chosen US shares directly.
US market dominance could be challenged by rising government debt, higher borrowing costs, weaker growth or stronger competition from other regions. However, the US still benefits from robust stock and bond markets, strong, global companies and a long history of innovation.
US markets affect investors globally because of their size and influence. When US shares rise or fall, this can shape company valuations, investor confidence and market performance across other regions.
