Are you a glass half full or a glass half empty person? The recent economic news cycle has certainly been playing on people's fears.
There is a lot of good news and reasons to be confident and excited about what's to come.
Sure, you can focus on the $100 trillion global debt ... but you could also focus on how U.S. states' GDPs compare to global GDPs.
Today, let's look at the $115 trillion global economy. For what it's worth, America is still the dominant force.
via VisualCapitalist
America has topped the list for over 100 years and will comfortably continue that reign in 2025. China comes in second, and together, they account for approximately two-fifths of global GDP. That said, China is comparatively a newcomer to their spot - with about 15 years here.
While we top the list, the fastest-growing economies would go to countries like India, Australia, and Brazil - which are all expected to rise the ranks in the coming years.
The trend to watch here is what will happen in the Middle East, with Syria overthrowing their government and the Israel-Palestine conflict continuing and impacting the supply chain of surrounding countries as well.
It will also be interesting to see how Trump's re-election and the continuing Russia-Ukraine conflict affect global trends.
Looking beyond traditional economic metrics, I believe artificial intelligence will emerge as one of the most critical factors driving power, progress, and wealth creation in the coming years. It's likely to become both the most coveted resource and the capability we'll most actively seek to deny our adversaries.
The real story of 2025's global economy isn't just told with GDP rankings. While America and China dominate those numbers, traditional economic metrics are becoming less relevant in a world where regional conflicts, supply chain dynamics, and technological innovation can reshape global power dynamics overnight. In the longer term, birth rates and the growth of middle-class infrastructure are strong predictors of what lies ahead. GDP alone doesn't measure what truly matters in the modern global economy.
What indicators are you watching?
How'd Markets Do In 2024
At the beginning of 2024, I asked the question - how did markets do in 2023?
It makes sense to ask the same question as we start 2025.
Before I get started, it’s worth stating that the market is not the economy ... but with Trump about to step into office, I know people are wondering.
I still think about the often-quoted quip “It's the economy, stupid” - coined by James Carville, a strategist in Bill Clinton’s successful 1992 U.S. presidential election against incumbent George H. W. Bush.
2022 was the worst year for the U.S. stock market since the 2008 financial crisis.
2023 was much better, but much of the gains came in concentrated sectors.
2024 saw nearly every sector posting gains - driven primarily by AI enthusiasm and a robust U.S. economy.
To help you get a sense of 2024 returns, VisualCapitalist put together a few helpful infographics.
via visualcapitalist
66% of companies on the S&P ended up in positive territory this year. The S&P also had its best two-year stretch since the late 90s.
Communication Services usurped IT’s #1 spot, driven primarily by Meta & Google. Strong consumer spending and digital ad revenue brought ad spending to almost $400 billion.
Materials was the only sector to see negative returns, hampered by China’s economic slowdown and increased interest rates.
Here is a more global look at return by asset class.
via visualcapitalist
Driven by that end-of-year run, Bitcoin surged to all-time highs, and gold also saw its best performance in 14 years. Meanwhile, bonds suffered heavily amid reflationary concerns and a potential widening deficit under the Trump administration.
In 2024, I predicted a brief market correction, blamed on various geopolitical instabilities and partisan weaknesses, followed by a long and steady push higher as the November elections approached.
How did that prediction hold up? I'd say pretty well.
On one level, I try not to think about or predict markets (because I know better). On another level, sometimes I can’t help myself ...
Part of me is so bullish about AI (and its impact on other things) that it’s hard to maintain objectivity. With that said, I think we’ll have another decent year. However, I expect increased volatility and noise.
What do you expect for 2025?
Do you think the continued investment into generative AI will impact these trends?
Will cryptocurrency continue to explode? What scenarios do you think have the potential to be force multipliers?
Posted at 03:00 PM in Business, Current Affairs, Ideas, Just for Fun, Market Commentary, Science, Trading, Trading Tools, Web/Tech | Permalink | Comments (0)
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