Just How Big Is the US Economy? State-by-State ComparisonsSubmitted by Bernhardt Wealth Management on October 4th, 2021
As we enter the fourth quarter of 2021, attention is being focused on the rate of growth in the US economy and analysts are submitting and revising their estimates about where we will end up in terms of the annual rate of growth in the US gross domestic product (GDP). By the way, it is significant that this year, the discussion is centering around the question, “How much growth?” since in 2020, the rate of growth was actually a rate of shrinkage: -3.5%, when compared with the previous year.
Current estimates of the US annual growth rate through the end of 2021 are running in the 5-6.5% range, depending on which analyst you consult. The nonprofit Conference Board is currently projecting that the US GDP will grow at an annual rate of 5.9% through December 31, 2021.
But it might be interesting to consider the global context of the US economy. It is common knowledge that the US economy is the world’s largest, but by how much?
One way of putting this into perspective is looking at the economy of each of the 50 states and comparing them with national economies of similar size from around the world. (See the image of the United States in this blog.) For example, both Texas and New York, individually, have economies of about the same size as that of the entire nation of Canada. California’s economy is roughly the same size as that of the United Kingdom, which is the world’s fifth largest. Going to the other end of the spectrum, North Dakota, which is one of the smallest states in the US for economic activity, with a total population (762,000) roughly equivalent to the city of Denver, Colorado, has an economy the size of the nation of Latvia. Nearby Minnesota’s economy equals all of Ireland’s, and Wisconsin’s equals Israel’s. Even little Rhode Island has a country-sized GDP, about the size of Senegal’s.
All told, the United States economy makes up 24.42% of the world’s aggregate economic activity, rivaled only by China (16.34%), with number 3 Japan (5.79%) a very distant third. Another perspective, this time putting countries on a circular “globe” with the size of their economies represented by area, shows not just the economic size of individual countries but also different global regions. (See the second image in this blog below.)
While being the biggest certainly doesn’t insure against the difficulties posed for US citizens by a major downturn, it does help to know that our country remains firmly in the lead of the rest of the world in terms of economic activity. It’s also worth noting that, given the importance of the US economy to the rest of the world, maintaining economic growth here at home should be generally seen as a benefit to other nations, since the health of our economy has a direct impact on US investment in the industries and economies of other countries.
At Bernhardt Wealth Management, we believe a global perspective on investing is vital to success in today’s interconnected financial markets. To learn more about our views on global investing, click here to read our article, “Investing Globally: Can You Pick the Winners?”