January 29, 2013 by Xavier Brenner
Since the financial crisis of 2008 and 2009, many have wondered whether the whole mess marked the end of U.S. global economic leadership. There are plenty of reasons many economists and investors take that position: elevated joblessness, stagnant median wages and record budget deficits among them.
Now, a team of Goldman Sachs (GS) analysts are arguing otherwise. A comprehensive Goldman 2013 outlook concludes that, while big fiscal challenges loom, the American economy is still a cut above the rest of the world when it comes to some crucial metrics. The meaning for investors? “US preeminence relative to other economies is the single most important factor underlying our core allocation to US assets.”
Here are 10 reasons the U.S. economy may still have gas in the tank in the decades ahead, according to Goldman’s analysis:
1) Still No. 1: The U.S. is home to a $15.7 trillion economy, the world’s largest and wealthiest. That’s double the size of China’s annual economic output, 2.5 times that of Japan’s and 4.5 times that of Germany’s.
2) Stock & Bonds: The U.S. stock market has delivered returns of 129% from March 2009 (the financial crisis nadir) through the end of 2012. American equities outperformed European stocks by 24%, Japanese equities by 97% and emerging market equities by 22% during the same period. U.S. Treasuries had a total return of 18% versus 14% for global developed economy bond markets.
3) Land & Water: The U.S. outstrips the rest of the world (save Russia) when it comes to natural resources—energy, water, minerals and so on—on a per capita basis. America has 4.6 times more water resources and 5.3 times more arable land than China.
4) Energy: The U.S. is on track to become the world’s biggest oil producerby 2020, ahead of Russia and Saudi Arabia, according to the International Energy Agency.