There is fact and there is speculation – we can never be sure what will happen to growth rates of markets or Gross Domestic Products over time, but history (illustrated by the chart above) shows they change significantly from one period to the next. (Source: Data from World Bank and The World in 2050, PricewaterhouseCoopers 2008; updates from John Hawksworth and Gordon Cookson; authors’ analysis)
Be careful about reading too much into the particulars, though, as GDP is not highly correlated (and may even have a negative correlation) with market returns – it would not be wise, for instance, to place one’s bets exclusively on the rise of China, India or Brazil. The bar graph demonstrates that using GDP to predict real equity return and real dividend growth would be dangerous, at best.
(Source: Credit Suisse Global Investing Yearbook - Elroy Dimson, Paul Marsh and Mike Staunt)
What these illustrations should show more than anything is that the United States does not enjoy a permanent position of privilege on the global stage. It has not always been the world’s economic superpower nor is it predestined to remain such in the future. Per the second graphic above, the US has not even been the leading market in terms of returns over the last century, falling short of Sweden, Australia and South Africa. Meanwhile, though, the US has grown to be the single largest market in the world – but it wasn’t always the case: at the height of its boom, Japan held a similarly sized stake of the global pie at 45%.