U.S. stocks have delivered 8.7% a year since independence was declared in 1776

By Jules Rimmer

What 250 years of independence have meant for investors in the U.S.

With the U.S. celebrating a quarter of a millennium as an independent republic, Bank of America has looked at its record of economic growth and its returns for investors. The results are impressive.

Michael Hartnett devoted most of his weekly "Flow Show" strategy note to assessing America's track record and calculated that over this expansive time frame U.S. stocks have delivered an annualized return of 8.7% while GDP has averaged 6%, inflation 2.5% and 10-year U.S. Treasury bonds BX:TMUBMUSD10Y have offered investors 5.1% annually.

U.S. stock prices since independence.

In comparing those statistics with those of its former colonial overlord, Hartnett, Bank of America's chief equity strategist, found an emphatic stateside outperformance on almost all fronts. Population growth of 2% per annum in the U.S. far outstrips the 0.8% of the United Kingdom, while the U.S.'s real GDP is substantially higher at 3.6% versus 2.1%.

U.S. vs. U.K. nominal GDP since American independence.

The superior returns of what Hartnett calls the "red, white and boom," compared with Britain, is all the more startling considering that nearly all of that came in the past century and a half. Until the railroad boom of the 18th century's second half, the U.S. was actually lagging the U.K., owing to major panics in 1819 and 1837.

-Jules Rimmer

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