Strength of U.S. Economy

After the Deepwater Horizon oil spill, the largest marine oil spill in history, which was caused by an April 20, 2010 explosion on the Deepwater Horizon oil rig, a client came in for our annual meeting.  He was very worried about his investment portfolio and expressed his fear about the oil spill.  I inquired what was his concern exactly concerning the oil spill.  I can still remember his response:

That we will run out of oil!

This story reminds me of the difficulty that we all have in understanding and appreciating the enormity of the global marketplace.  One of those enormous items is how ridiculously large the US economy is.   For 2017, America’s Gross Domestic Product (GDP) was $19.4 trillion ($19,400,000,000,000) – I bet that you never saw that many zeros before.  To help put that number into perspective AEI produced the following map.

The map below compares the economic size as measured by the Gross Domestic Product (GDP) of individual US states to other country’s entire national output.(1)  The GDP is a monetary measure of the market value of all the final goods and services produced in a year.

Overall, the U.S. produced approximately 24% of world GDP in 2017, with only about 4.3% of the world’s population. Three of America’s states (CA, NY and TX) – as separate countries – would have ranked in the world’s top 11 largest economies last year. Together, those three US states produced nearly $6.0 trillion in economic output last year.

Throughout the states comparisons, the world-class productivity of the American workforce comes though.  Adjusted for the size of the workforce, there might not be any country in the world that produces as much output per worker as the U.S.  The worker productivity and the use of advanced technology is evident in the numbers.

The map above and the statistics summarized here help remind us of the enormity of the U.S. economic powerhouse.

To quote, Mark Perry,

So let’s not lose sight of how ridiculously large and powerful the U.S. economy is, and how much wealth, output and prosperity is being created every day in the largest economic engine there has ever been in human history.

The AEI report that was written regarding this map discussed several of the large states. AEI wrote:

1. America’s largest state economy is California, which produced $2.75 trillion of economic output in 2017, more than the United Kingdom’s GDP last year of $2.62 trillion. Consider this: California has a labor force of 19.3 million compared to the labor force in the UK of 33.8 million. Amazingly, it required a labor force 75% larger (and 14.5 million more people) in the UK to produce the same economic output last year as California.
2. America’s second largest state economy – Texas – produced nearly $1.7 trillion of economic output in 2017, which would have ranked the Lone Star State as the world’s 10th largest economy last year. GDP in Texas was slightly higher than Canada’s GDP last year of $1.65 trillion.
3. Even with all of its oil wealth, Saudi Arabia’s GDP in 2017 at $683 billion was below the GDP of US states like Pennsylvania ($752 billion) and Illinois ($820 billion).
4. America’s third largest state economy – New York with a GDP in 2017 of $1.55 trillion – produced slightly more economic output last year than South Korea ($1.54 trillion). Amazingly, it required a labor force in South Korea of 27.9 million that was nearly three times larger than New York’s (9.7 million) to produce roughly the same amount of economic output last year! More evidence of the world-class productivity of American workers.

So continue to invest in the great U.S. companies supplying their goods and services around the world even when we have natural and man-made disasters like the Deepwater Horizon oil spill.

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(1) The map and analysis above was created by Mark Perry (with assistance from AEI’s graphic design director Olivier Ballou) by matching the economic output (Gross Domestic Product) for each US state (and the District of Columbia) in 2017 to a foreign country with a comparable nominal GDP last year, using data from the BEA for GDP by US state and data for GDP by country from the International Monetary Fund (IMF). For each US state (and the District of Columbia), we identified the country closest in economic size in 2017 (measured by nominal GDP) and those matching countries are displayed in the map above and in the table below. Obviously, in some cases, the closest match was a country that produced slightly more, or slightly less, economic output in 2017 than a given US state.