The growth potential of the United States economy in the long run looks rather gloomy against the backdrop of modern history. So how could the U.S. stock market still be the world’s best equity investment for the long run? Here’s the answer: The economic growth potential of a nation is the sum of three growth rates: GDP, productivity, and labor force. The U.S. has the potential to grow at an average annual rate of 1.9% from 2022 through 2026, according to the latest projections from the Congressional Budget Office (CBO). That’s according to the research arm of Congress, which controls spending by the United States Government.
Compared to previous decades, the growth potential of the U.S. looks weak. However, the U.S. compared to Europe and Japan has much greater long-term growth potential. Among world economic powers, China has the highest long-term growth potential. . However, investing in China’s economy is very risky because it is government controlled. American capitalism and the US system of government continue to make the United States stock market the best equity investment over the long run worldwide.
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