Financial Services Spotlight

The Financial Services Industry in the United States

Overview

Financial markets in the United States are the largest and most liquid in the world. In 2017, finance and insurance represented 7.5 percent (or $1.45 trillion) of U.S. gross domestic product. Leadership in this large, high-growth sector translates into substantial economic activity and direct and indirect job creation in the United States.

Financial services and products help facilitate and finance the export of U.S. manufactured goods and agricultural products. In 2017, the United States exported $114.5 billion in financial services and insurance and had a $40.8 billion surplus in financial services and insurance trade (excluding re-insurance, the financial services and insurance sectors had a surplus of $69.6 billion). The financial services and insurance sectors employed 6.3 million people in 2017. 

Investment in the U.S. financial services industry offers significant advantages for financial firms. As of 2017, at least 133 of Fortune's Global 500 companies have chosen to locate their headquarters in the United States to take advantage of its creative, competitive, and comprehensive financial services sector. The industry offers the greatest array of financial instruments and products to allow consumers to manage risk, create wealth, and meet financial needs.

Industry Subsectors

Banking: By the end of 2017, the U.S. banking system had $17.4 trillion in assets and a net income of $164.8 billion. The sector supports the world’s largest economy with the greatest diversity in banking institutions and concentration of private credit anywhere in the world. The outlook for the well-developed American banking industry has improved alongside the uptick in economic growth prospects, and, according to BMI Research, bank assets are set to grow by 7 percent in 2018.

Asset Management: The U.S. asset management subsector is unrivaled in its depth and diversity. U.S. asset managers are currently meeting the pension management needs of over 60 percent of the global retirement market.  Total U.S. retirement assets were approximately $28.2 trillion at the end of 2017. Moreover, if insurance assets and mutual funds are included, U.S. asset managers held nearly $51 trillion of long-term conventional assets under management in 2016 (more than 47 percent of the global total for these funds).

Insurance: In 2016, the insurance industry’s net premiums written totaled $1.1 trillion. According to NAIC data, premiums recorded by life and health insurers accounted for nearly 53 percent, and premiums by property and casualty insurers accounted for 47 percent.  Additionally, about one-third of all reinsurance sold worldwide is bought by U.S. firms. International insurance companies are actively seeking business partnerships and collaborations with U.S. insurance companies.  

Venture Capital: The United States is the birthplace of the global venture capital (VC) industry, and it continues to support many of our most innovative companies. In 2017, $84 billion was invested in the U.S. VC industry across more than 8,000 different deals (Pitchbook), the highest amount since the early 2000s and a 16 percent increase from 2016. VC-backed companies employ 38 percent of the U.S. workforce of public American companies, and account for 82 percent of private sector research and development. These companies have historically generated revenue equal to 21 percent of U.S. GDP. (Stanford University and NVCA)

Private Equity: U.S. private equity firms invested more than $500 billion in U.S.-based companies in 2017. The private equity industry in the United States comprises nearly 4,700 investment firms, operating U.S.-based businesses in all 50 states. The industry owns over 30,000 private U.S. companies. These U.S. companies backed by U.S. private equity firms employ 11.3 million people in the United States and 19.6 million people worldwide. In 2017, business services and consumer-related businesses attracted the majority of U.S. private equity investment. (AIC)

Prepared in collaboration with the International Trade Administration's Industry & Analysis Unit (I&A)

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Industry & Analysis (I&A) staff of industry, trade and economic analysts devise and implement international trade and investment strategies to strengthen the global competitiveness of U.S. industries. By combining in-depth analysis with the International Trade Administration’s industry relationships, I&A devises initiatives to unlock export and investment opportunities for U.S. businesses, represent the interests of U.S. industry in trade negotiations, and publishes research on global opportunities for U.S. companies.