Jon Cunliffe, Head of Investment Office at JM Finn, shares his insights on the 250th anniversary of US independence.
As America nears its 250th anniversary, it is a fitting time to reflect. The US accounts for roughly a quarter of global GDP, yet the dollar sits behind around half of global payments and most trade finance. In effect, much of the world economy still runs on US financial infrastructure, even when the US is not directly involved.
Since the country’s birth, it has evolved from a small peripheral economy into the centre of the global financial system. From contributing just 1-2% of the global economy at independence, it has risen to become the world’s dominant economic power, reaching 40% of global GDP in the post-World War II period, before declining to around 25%. This decline largely reflects the growing influence of China which has reshaped the balance of economic power.
At its recent zenith, the US Dollar accounted for 50% of payments and invoices, 80% of trade finance and 90% of FX usage, earning what former French President Valéry Giscard d’Estaing famously described as America’s “exorbitant privilege”. However, the nature of exceptionalism has evolved from land, labour, and manufacturing to dominance across technology, capital markets, and intangible assets such as AI, software and IP, with the US retaining a clear edge in innovation and the ability to monetise it.
The US now dominates global financial markets, representing roughly 70% of global equity market cap (MSCI World) and a disproportionate share of global profits, reinforcing capital inflows and valuation premia. Structural supports remain strong, including reserve currency status, deep capital markets, leading research ecosystem, and a significant AI investment advantage, with no clear competitor at scale.
However, some traditional advantages are weakening at the margin. Demographic conditions are becoming less favourable, driven by slower population growth and tighter immigration trends under Trump, alongside rising policy uncertainty, and the systematic weakening of key institutions. Fiscal dynamics are also a growing constraint, with high and rising debt levels implying greater reliance on continued capital inflows and potentially higher term premia over time.
In market terms, the US likely remains structurally exceptional but may be closer to peak relative to pricing and market leadership, given elevated concentration, valuations, and market positioning.
“The bottom line is that US exceptionalism has likely reached a high watermark – but decline from here will be gradual.”
Jon Cunliffe, Head of Investment Office at JM Finn
