Bank of America has marked America’s 250th anniversary as an independent republic by examining its long-term record of economic growth and investor returns.
Michael Hartnett, the bank’s chief equity strategist, devoted his weekly “Flow Show” strategy note to assessing the country’s financial track record across that sweeping historical span.
Hartnett calculated that U.S. stocks have delivered an annualized return of 8.7% since independence was declared in 1776, a figure that underscores the remarkable durability of American capital markets.
GDP growth averaged 6% annually over the same period, while inflation came in at 2.5% and 10-year U.S. Treasury bonds returned investors 5.1% per year.
Hartnett compared those figures against those of Britain, America’s former colonial overlord, and found emphatic outperformance on nearly every front.
The strategist describes the phenomenon as the “red, white and boom,” a characterization of America’s outsized economic and market dominance over its closest historical rival.
Population growth in the U.S. averaged 2% per annum over the period, providing a consistent demographic engine that helped fuel long-term economic expansion.
Perhaps most striking is Hartnett’s finding that nearly all of the superior U.S. performance relative to Britain materialized in the past century and a half rather than across the full 250 years.
Prior to the railroad boom of the second half of the 18th century, the U.S. was actually trailing the U.K. in economic performance, weighed down by major financial panics in 1819 and 1837.
Those early crises highlight how fragile the young American economy once was before infrastructure investment and industrialization transformed the country into the world’s dominant financial power.
The findings arrive as investors and policymakers continue to debate the resilience of U.S. markets in the face of modern challenges, including persistent inflation pressures and shifting global trade dynamics.
Hartnett’s historical analysis serves as a reminder that American markets have navigated panics, wars, and depressions across 250 years while still delivering competitive long-term returns for patient investors.
