the conversation gap: why "america's booming economy" lost the context
the headline problem
we keep having the wrong argument about the economy.
on one side, you have the people pointing at the s&p 500 — three straight years of double-digit gains, 16.4% in 2025 alone — and saying the story is obvious. america's markets are thriving. the numbers don't lie. anyone who feels differently just isn't paying attention to the data.
on the other side, you have the people who feel squeezed — by prices, by stagnant wages, by the persistent sense that the gains are going somewhere, just not to them — and who dismiss the market talk as disconnected from their reality.
both sides are having the wrong fight. because the actual problem isn't whether the economy is performing. it's that the frame we're using to measure performance has quietly stopped telling the full story — and almost nobody is pointing that out.
the number is real. the context got left out.
let's start with what's true. the s&p 500 returning 16.4% in 2025 is not a fiction. three years of double-digit gains are three years of real gains. if you had money in the market, those returns happened.
but here's what the headline leaves out: measured against the rest of the world, the united states just finished last among its g7 peers.
the msci all country world ex-usa — a broad index of every major market that isn't the united states — returned 29.2% in 2025. canada returned 28.9%. germany, approximately 25%. mexico, 25.2%. the uk and japan, around 20% each.
every major economy that shares a stage with the united states at the g7 table outperformed it. some by nearly double.
and in 2026, the gap has widened further. through late february, the s&p is up less than 1% year-to-date. the average across 46 country etfs is up 10%. the united states ranks 38th out of 46. the s&p hasn't lagged the global index by this margin at this point in a year since 1995.
this isn't a bad quarter. it's a structural divergence. and the fact that it barely registers in the "america is booming" conversation is exactly the problem.
the dollar did some of the work
there's a second layer here that almost never gets discussed, because it requires a small amount of financial mechanics to explain — and financial mechanics don't make for clean headlines.
in 2025, the us dollar index fell 9.4%. that was its worst year since 2017. a weakening dollar is not a neutral fact. it has a direct effect on how investment returns look when you compare them across countries.
when foreign currencies strengthen against the dollar, international gains don't just look better in local terms — they convert back into more dollars when brought home. meaning a significant portion of international outperformance in 2025 wasn't purely the result of stronger foreign economies. it was the dollar losing ground while the s&p climbed.
the analogy isn't complicated: a raise that inflation outruns still looks like a raise on paper. the number goes up. the purchasing power doesn't.
this matters because the "booming economy" narrative is built on the number going up. it doesn't tend to ask what the number is worth relative to everything else — other currencies, other markets, the actual cost of living for the people inside the economy being celebrated.
america built ai. the world is deploying it.
the honest counterargument deserves real space here, because it's not nothing.
the united states captured 79% of global ai venture capital funding in 2025. american companies built the infrastructure, the models, and the platforms that are now reshaping entire industries. that's not a talking point — it's documented capital allocation at a scale that no other country came close to matching.
and the argument that follows from that is coherent: you can't just look at last year's stock returns. you have to look at where the next decade of value is being created. if america owns the picks and shovels of the ai economy, the current underperformance is a lag, not a trend.
the problem with this argument is the concentration it requires you to ignore. goldman sachs has noted publicly that the s&p's dependence on a handful of technology names now represents the highest index concentration on record. the gains aren't distributed across a broad, healthy economy. they're stacked in a small number of megacap names — and even those companies are showing signs of narrative fatigue. ai mentions on megacap conference calls fell 14% this past earnings season. the firms that built the ai story are, for now, talking about it less.
and the next phase of ai — the application layer, the deployment at scale, the economic value that comes from integrating these tools into industries — is not an american monopoly. by 2030, china is projected to nearly match north america in generative ai market size. europe is investing heavily in sovereign ai infrastructure. the assumption that america builds it and therefore america captures the returns is not guaranteed. it's a bet.
even the bulls are hedging
here's the data point that tends to get quietly buried.
goldman sachs' own ten-year forecast projects the s&p 500 will return approximately 3% annually through 2035. to put that in context: that would place it in the 7th percentile of all ten-year returns since 1930. in the same analysis, goldman projects global stocks returning 7.7% annually, and notes the dollar is roughly 15% overvalued.
this is not a bearish fringe analysis. this is one of the most influential financial institutions in the world telling its clients, in measured but unambiguous terms, that the decade of american outperformance is likely behind us — and that the math favors looking elsewhere.
that forecast doesn't make headlines the way the s&p's latest closing number does. it probably should.
the framing is doing real work
none of this is an argument that the united states is in economic crisis. it isn't. but the persistence of the "booming economy" frame — and the way it crowds out the fuller picture — isn't accidental.
a strong market narrative serves a political function. it validates current leadership. it makes skepticism look like pessimism. it positions anyone pointing at real gaps or real underperformance as someone who just doesn't understand how good things are.
but the people who feel like the boom isn't reaching them aren't misreading the data. they're reading different data. job-changer pay growth is at its slowest since 2021, a sign that the labor market has cooled significantly from its post-covid peak. consumer optimism just hit a record low in gallup's annual survey — only 59% of americans expect their lives to be better in five years, down ten points from the record high a decade ago. the market is whipsawing: the s&p crossed its 50-day moving average ten times in fifty trading days, the most since 2018. that's not the signature of a confident, humming economy. that's indecision priced into the index in real time.
the grievance is real. the framing just isn't honest about what's driving it or where it fits in the broader picture.
what the full picture actually looks like
here's the thing about context: it doesn't make the good news go away. it just puts it in the right frame.
three years of s&p gains are three years of gains. the us did capture the majority of global ai investment. the market is not broken.
but new zealand, canada, japan, and mexico — countries that never appear in the "america is booming" conversation — all outperformed the united states in 2025, some by nearly double. the s&p is barely positive in 2026 while the rest of the world averages 10% gains. goldman sachs is forecasting a decade of relative underperformance. and the dollar that those gains are measured in lost almost 10% of its value last year alone.
the number went up. it's just not the only number that matters.
next time someone points to the s&p as proof of american economic dominance, it's worth asking: which currency are they measuring in? where does the us rank against the other 45 country etfs? what does goldman project for the next ten years?
that's not pessimism. that's the conversation we're not having.
the conversation gap runs every tuesday on the veritas edit. the mechanics no one explains.
