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US GDP per capita by state vs. European countries and Japan, Korea, Mexico and China and some lessons for The Donald

stateGDP

The table above compares the GDP per capita of America’s 50 states in 2014 (BEA data here) to the GDP per capita of selected countries in Europe and Asia on a Purchasing Power Parity (PPP) basis, based on data from the World Bank. As explained by the World Bank:

PPP GDP is Gross Domestic Product (GDP) converted to international dollars using purchasing power parity rates. An international dollar has the same purchasing power over GDP as the U.S. dollar has in the United States.

Adjusting for PPP allows us to make a more accurate “apples to apples” comparison of GDP per capita among countries around the world by adjusting for the differences in prices in each country. For example, the UK’s unadjusted GDP per capita was $45,729 in 2014, but because prices there are higher on average than in the US (for food, clothing, energy, transportation, etc.), the PPP adjustment lowers per capita GDP in the UK to below $40,000. On the hand, consumer prices in South Korea are generally lower than in the US, so that increases its GDP per capita from below $28,000 on an unadjusted basis to above $34,000 on a PPP basis.

As the chart demonstrates, most European countries (including Germany, Sweden, Ireland and Denmark) if they joined the US, would rank among the poorest one-third of US states on a per-capita GDP basis, and the UK, France, Japan and New Zealand would all rank among America’s very poorest states, below No. 47 West Virginia, and not too far above No. 50 Mississippi. Countries like Italy, S. Korea, Spain, Portugal and Greece would each rank below Mississippi as the poorest states in the country.

The ranking of US states by per GDP per person in 2014 demonstrates the significant economic contribution that mining, and oil and gas extraction make to a state’s economy. All three of America’s wealthiest states in 2014 by GDP per person — North Dakota ($72,719), Alaska ($71,671), and Wyoming ($69,993), all more than 28% above the US average per capita GDP of $54,629 — benefited greatly from the development of their natural energy resources including coal, oil and gas.

Bottom Line: When we hear from The Donald about how he wants to “make America great again,” because “we don’t win any more,” and about how “we don’t beat China or Japan in trade” and how those countries “kill us” in trade. When The Donald tells us that Mexico is “beating us economically” and “laughing at us,” maybe we should remind him that Mexico and China, as US states, would both be far below our poorest state — Mississippi — by 51% and 62% respectively for GDP per capita; and Japan would be barely above our poorest state — Mississippi. Using GDP per capita as a measure of both economic output per person and of a country’s standard of living, America is winning quite handsomely. And one of the factors that contributes significantly to our standard of living, which is among the highest in the world and the highest in history, is the availability of cheap imported goods from countries like Mexico, Japan and China.

The chart above show us that far from laughing at us, the average citizen of Mexico, China, Japan, the UK and France is probably quite envious of life in America, especially the citizens of Mexico and China, whose per capita GDP, adjusted for prices, is less than 50% of the per capita GDP of America’s poorest state – Mississippi. Further, the average US state is more than 3 times more prosperous than either Mexico or China, and America’s highest-income state — North Dakota — has a per capita GDP more than 5 times greater than China’s per capita GDP, and more than 4 times greater than Mexico’s. Sure seems like the economic data on GDP per capita suggest that America is winning economically, and that the only laughing that should be going on is the laughing we should be hearing about The Donald’s infantile, primitive, ill-informed and outdated views on international trade and America’s position in the world economy.

 

Source: New AEI Feed
US GDP per capita by state vs. European countries and Japan, Korea, Mexico and China and some lessons for The Donald






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