The U.S. economy was the “hottest,” as President Trump often reminds us. Then he was re-elected.
President Donald J. Trump continually reminds us that the United States is the “hottest” country with the “greatest” economy ever. He often — usually — cites U.S. stock market price indexes as evidence. These indexes have been rising faster than world indexes, representing “hot.” Then, Trump started his second term.
Here are two charts of U.S. and world stock market prices. These charts compare U.S. stock market performance (S&P 500) against international markets (MSCI ACWI ex USA) over two time frames, revealing a story of dominance and reversal. Over the eight years from January 2017 through November 2025, U.S. stocks have tripled in value while international stocks have gained only about 65 to 70% — a striking divergence driven primarily by the exceptional performance of American technology giants like Apple, Microsoft, and Nvidia, which persisted across three different presidential administrations.
However, 2025 tells a completely different story: international stocks have gained 24% year-to-date while U.S. stocks have risen only 12%, with the gap opening dramatically after an April crash that hit American markets three times harder than international markets.
This reversal almost certainly reflects investor concerns about the Trump administration’s tariff policies, which raise costs for U.S. companies and invite retaliation against American exporters. While the long-term data shows genuine U.S. competitive advantages in innovation and technology, the 2025 data suggests that specific policy choices have introduced headwinds that are weighing more heavily on American markets than their international counterparts. Whether this represents a temporary adjustment or a more lasting shift remains to be seen.
Understanding These Market Charts
These two charts tell a striking story about how U.S. stock markets have performed compared to international markets, and how that story changes dramatically depending on the time frame you examine.
What Are We Looking At?
Before interpreting the data, it helps to understand what these charts are actually measuring and why they’re designed the way they are.
Both charts use a technique called “indexing” that makes it easy to compare investments with different starting prices. Rather than showing raw prices (where the S&P 500 might be at 6,000 while another index is at 500), indexing sets everything to start at 1.0 on the first day. From there, you can read growth as a simple multiplier. If a line reaches 1.20, that represents a 20% gain from the starting point. If it drops to 0.85, that’s a 15% loss. This approach lets you compare any two investments on equal footing, regardless of their actual price levels.
The two lines in these charts represent fundamentally different investment universes:
SP500 (the teal/blue line) tracks the S&P 500 index, which measures the performance of 500 large U.S. companies. This is the most widely followed benchmark for American stock market performance and includes household names like Apple, Microsoft, Amazon, JPMorgan Chase, and Johnson & Johnson. When financial news reports that “the market” went up or down, they’re usually referring to the S&P 500.
ACWS (the coral/red line) tracks the MSCI ACWI ex USA index, which measures stock performance across developed and emerging markets worldwide while completely excluding the United States. This includes companies in Japan, the United Kingdom, Germany, France, China, India, and dozens of other countries, but no American companies.
This design choice is important because it means there’s zero overlap between these two indices. It is a pure head-to-head comparison: U.S. large-cap stocks versus the entire rest of the world’s stocks. An investor could theoretically hold both of these in a portfolio without owning any company twice.
The Eight-Year Story: Dramatic U.S. Outperformance
Let’s start with the chart that begins in January 2017, because this longer view, spanning both of Trump’s presidencies and Biden’s term, provides essential context for understanding 2025.
The chart begins when Donald Trump first took office in January 2017. Through his first term, you can see both indices rising, though the S&P 500 consistently outpaced international stocks. By early 2020, the S&P 500 had risen to approximately 1.5 (a 50% gain), while international stocks had reached only about 1.2 (a 20% gain).
Then came the COVID crash in March 2020, visible as a sharp plunge in both lines. The S&P 500 fell to around 0.65-0.70 (a 30-35% decline), while international stocks dropped to approximately 0.85-0.90 (a 10-15% decline). Both indices recovered and continued climbing, but at vastly different rates. The divergence that began before COVID accelerated sharply afterward.
During the Biden presidency (2021-2025), the S&P 500 surged through one record after another. By late 2021, it had reached around 2.0 (doubled from January 2017). The 2022 bear market, which visible as a significant decline through that year, pulled it back to approximately 1.6, but it recovered strongly through 2023 and 2024. By early 2025, just before Trump’s second inauguration, the S&P 500 had climbed to roughly 2.7.
International markets followed a completely different trajectory. They peaked at around 1.45 in late 2021, fell during the 2022 bear market to about 1.0 (erasing all gains since 2017), and recovered slowly through 2023-2024 to reach approximately 1.65 by early 2025.
By late November 2025, the cumulative performance gap over this eight-year period was staggering. The S&P 500 has reached approximately 2.95 to 3.0, meaning U.S. stocks have tripled since January 2017. International stocks have climbed to only about 1.65 to 1.70, which is a gain of roughly 65 to 70%. In other words, U.S. markets have delivered returns that are nearly twice as large as international markets, in absolute terms, over this period.
The primary driver of U.S. growth has been the extraordinary performance of American technology companies. Companies like Apple, Microsoft, Nvidia, Amazon, Alphabet, and Meta have seen their valuations soar, driven by strong earnings growth, dominant market positions, and more recently, investor enthusiasm about artificial intelligence. Because the S&P 500 is weighted by market capitalization, these vary large tech companies have an outsized influence on the index’s performance. International markets simply don’t have an equivalent concentration of world-leading technology giants, so they haven’t benefited from this trend to nearly the same degree.
Notably, this outperformance occurred across three different presidential administrations with very different economic policies, suggesting that structural advantages in U.S. equity markets have been the primary driver rather than any single administration’s policies.
The 2025 Story: A Sharp Reversal
Now let’s examine the chart that begins in January 2025, which tells a completely different story.
Through January and February, both indices drifted modestly higher, with U.S. and international stocks performing roughly in line with each other. Then came March and early April, when a large divergence began to unfold.
Both indices crashed sharply in early April, but the severity was strikingly different. The S&P 500 plunged to approximately 0.85 (a 15% loss from January), while international stocks fell only to about 0.95 (a 5% loss). U.S. markets were hit three times as hard as their international counterparts.
This timing almost certainly reflects market reaction to tariff policies announced by the Trump administration. Tariffs affect U.S. companies in multiple ways: they raise costs for American manufacturers who import components, they invite retaliatory tariffs that hurt American exporters, and they create uncertainty about supply chains and trade relationships. Because these effects fall most directly on American businesses, it makes sense that U.S. markets would react more negatively than international markets, even though international companies also face disruptions from trade tensions.
The recovery since April has been strong for both indices, with both reaching new peaks by late October. International stocks climbed to approximately 1.29 (a 29% gain from January), while the S&P 500 reached about 1.17 (a 17% gain). However, both indices have declined from those peaks in recent weeks. You can see both lines trending downward through late November.
As of the latest data, international stocks stand at approximately 1.24 (up 24% for the year), while the S&P 500 is at roughly 1.12 (up 12% for the year). That means international markets have delivered exactly double the returns of U.S. markets in 2025.
This is a complete inversion of the eight-year trend. After years of U.S. dominance spanning multiple presidencies, international stocks have suddenly become the dramatically better performers in 2025, and by a substantial margin.
What Does This Mean for Understanding the U.S. Economy?
This is where interpretation requires careful thought, because stock market performance and economic health are related but not identical concepts.
Stock prices reflect investors’ expectations about future corporate profits. When the S&P 500 rises, it means investors collectively expect American companies to generate more earnings in the future—whether from revenue growth, cost reductions, favorable policies, or other factors. When the index falls, it means expectations have dimmed. This makes stock markets forward-looking indicators that respond to anticipated changes before they fully materialize in economic data.
The eight-year outperformance of U.S. markets does reflect genuine economic strengths. American companies — particularly in technology — have delivered exceptional earnings growth across multiple presidential administrations. The U.S. has maintained advantages in innovation, entrepreneurship, access to capital, and flexible labor markets that have allowed its leading companies to outcompete international rivals. These gains are grounded in real business performance.
The 2025 underperformance likely reflects investor concerns about specific policy choices and their economic consequences. Tariffs function as taxes on imports, raising costs for businesses and consumers. They also tend to reduce trade volumes overall, which can slow economic growth. When investors see policies that they expect to reduce corporate profits — even if the intent is to achieve other goals like protecting domestic industries — stock prices adjust downward to reflect those expectations.
However, several important caveats apply when drawing conclusions about “the economy” from stock market charts:
First, the stock market represents publicly traded large companies, not the entire economy. Small businesses, workers’ wages, unemployment rates, inflation, and many other economic indicators don’t show up directly in stock prices. The S&P 500 can rise while ordinary Americans struggle, or it may fall while employment remains strong.
Second, one year is a short time frame for drawing durable conclusions. Market leadership rotates over time, and 2025’s international outperformance could represent a temporary adjustment rather than a lasting shift. If trade tensions ease, or if tariffs prove less damaging than feared, or if other factors come into play, the relative performance could reverse again. The eight-year chart shows that U.S. structural advantages have persisted across very different policy environments.
Third, stock prices reflect expectations that may prove wrong. Markets try to anticipate the future, but they frequently misjudge it. The fact that investors currently expect tariffs to hurt U.S. companies more than international competitors doesn’t guarantee that outcome will materialize.
With those caveats in mind, here’s a balanced way to interpret these charts: The eight-year data demonstrates that the U.S. economy has genuine competitive strengths — particularly in technology and innovation — that have driven exceptional market performance relative to the rest of the world, regardless of which party controlled the White House. The 2025 data suggests that specific policy decisions have introduced new headwinds that are weighing on U.S. markets more heavily than their international counterparts. Whether this represents a temporary correction or the beginning of a longer-term shift in relative performance remains to be seen — but the magnitude of the divergence in both directions is striking and worth understanding.