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CONTRIBUTORS

Grant Bowers

Portfolio Manager,
Franklin Equity Group®
United States

Key takeaways

  • The US economy has demonstrated historical resilience across divergent economic policies—from the 1980s Reagan-era deregulation to post-global financial crisis reforms of the 2010s—underscoring the enduring strength of US financial markets and infrastructure.
  • Today’s environment, marked by tariffs, trade tensions and a shifting geopolitical landscape, echoes past cycles. We believe the US economy and its companies continue to be powered by structural advantages and secular growth drivers.
  • In our view, American companies remain uniquely positioned to drive the next wave of global economic expansion, making US equity exposure worth consideration as a cornerstone of any diversified portfolio.
     

A durable edge in a shifting world

From the sweeping tax cuts and deregulation of the 1980s to the regulatory tightening of the 2010s, the US economy has weathered dramatic shifts in political and economic ideology. Yet through it all, one constant has remained: the resilience of the American economy and the power of its innovation ecosystem, which we discuss in this paper.

In 2025—a volatile year defined by macroeconomic headwinds and geopolitical recalibration—US equities have continued to deliver positive returns. While headlines have focused on trade tensions, elevated interest rates and fiscal uncertainty, both historical precedent and current market performance reinforce our core thesis that the enduring strength of US businesses and capital markets will likely drive global growth into the next decade.

The case for enduring US leadership

Over decades of change and growth, US equity markets have shown a remarkable ability to adapt and thrive. While the United States is by no means immune to global headwinds, its economy, institutions and corporations are uniquely equipped to navigate them. Anchored by a powerful innovation ecosystem, deep capital markets and world-class institutions, the US economy continues to lead the world.

In our view, US equities remain a vital cornerstone of any diversified portfolio—and a powerful engine for global growth.

WHAT ARE THE RISKS?

All investments involve risks, including possible loss of principal.

Diversification does not guarantee a profit or protect against a loss.

Equity securities are subject to price fluctuation and possible loss of principal.

Large-capitalization or mega-cap companies may fall out of favor with investors based on market and economic conditions.

Small- and mid-cap stocks involve greater risks and volatility than large-cap stocks.

Investment strategies which incorporate the identification of thematic investment opportunities, and their performance, may be negatively impacted if the investment manager does not correctly identify such opportunities or if the theme develops in an unexpected manner. Focusing investments in the health care, information technology (IT) and/or technology-related industries carries much greater risks of adverse developments and price movements in such industries than a strategy that invests in a wider variety of industries.

Any companies and/or case studies referenced herein are used solely for illustrative purposes; any investment may or may not be currently held by any portfolio advised by Franklin Templeton. The information provided is not a recommendation or individual investment advice for any particular security, strategy, or investment product and is not an indication of the trading intent of any Franklin Templeton managed portfolio.

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