FORECASTS & TRENDS E-LETTER
by Gary D. Halbert
March 7, 2017
- US Continues to Dominate World in Gross Domestic Product
- Top 12 Countries Ranked by Gross Domestic Product
- US Economy is Not Falling Behind the Rest of the World
- Two-Thirds of Workers Don’t Put Money in Their 401(k)s
- Other Reasons Why Only One-Third of Americans Contribute
Today, we’ll take a look at some very interesting data released by the World Bank last month, which shows that the United States still dominates the global economy by a wide margin. The US produces almost one-fourth of all global GDP, and has been at that level or higher for over two generations. This is remarkable.
Following that discussion, we’ll turn to another topic which is quite disturbing. New data from the US Census Bureau finds that two-thirds of Americans are not contributing anything to their 401(k) or similar retirement savings plan at work. The latest numbers are far worse than we have assumed over the last 15-20 years.
So we have very good news and very bad news to cover today. It should make for an interesting discussion.
US Continues to Dominate World in GDP
Many of us are guilty of being critical of America in one way or another. Hardly a week passes when there is not some economic or other report that provides cause for concern. But not the one I will share with you today.
The latest global Gross Domestic Product numbers by country from the World Bank were released last month. The graphic below was created by HowMuch.net to show the relative share each country contributes to the global economy.
The chart represents the entirety of the $74 trillion global economy in nominal terms. Meanwhile, each country’s segment is sized accordingly to their percentage of global GDP output. Continents are also grouped together and sorted by color.
The chart clearly illustrates just how dominant the United States of America is economically. The US accounted for a whopping 24.3% of global GDP in 2015, and it should be even higher today. China came in a distant second at just under 15% of global GDP.
So whenever you hear about the decline of the United States in terms of the economy, keep this chart in mind.
Per capita output of the United States remains high. Given the size of the country, which is the third largest in the world, per capita output of the United States is still mind-boggling.
Even if we count the European Union as one country, the EU still trails the US by several percentage points in terms of GDP. The West (meaning the West above the equator) is still dominant and shows few signs of falling behind anytime soon.
We often hear it said that China will soon overtake the US as the world’s largest economy. That will not happen in most of our lifetimes, if ever, as you can see above. China is catching up in terms of gross national productivity, but in terms of productivity per capita (per person), it is still a backward nation.
At least two-thirds of China’s population still lives on poverty-stricken small family farms. It is still a village economy. It is going to take decades for those people to drag themselves out of a level of poverty that Americans have not seen for over a century.
US Economy is Not Falling Behind the Rest of the World
Here is what economic historian and still-prolific writer Dr. Gary North said upon seeing the global chart above and the latest data from the World Bank:
“The idea that the United States is falling behind the rest of the world’s economy is simply nonsense… The United States of America has maintained this enormous share of the world’s output for at least two generations. What more could anybody ask from an economy?
The rest of the world has increased its output to a degree that would not have been conceivable in 1950. This is especially true of China. It is also true of Western Europe. Nevertheless, for all of this increase in output, the United States of America is still the biggest player of all. We are not falling behind.
This tells us that the process of economic growth, which is now worldwide north of the equator, is close to unstoppable. If World War II in Western Europe was a setback that leaves no traces today, then the steady expansion of per capita income of 2% per year overcomes all known setbacks.
We are all richer than we were in 1950. When it comes to things digital, there is simply no comparison. I remember the world of 1950, and the world I live in today is economically much better than the world I lived in back in 1950.
The moral world is much worse [emphasis added: GDH]. There is legitimate cause for hand-wringing in this area of life. But there is no legitimate cause for hand-wringing in the field of economic development.
I don’t care how bad the welfare state seems. I don’t care how bad Keynesian [budget] deficits seem. The fact of the matter is this: we are getting richer, year by year, and if World War II did not set us back, then I don’t think anything will set us back over the next two decades.
There will be a redistribution of wealth in the United States over the next two decades with respect to which groups prosper comparatively and which groups don’t. But the economic pie will be bigger in two decades than it is today.
This testifies to the enormous productivity of the free market economy. The world today no longer deals with communism or socialism, other than North Korea, Cuba, and Venezuela. The Keynesian economy is vastly more productive than Marxism ever was. The world had its fling with Marxism, and that ended on December 25, 1991 [end of the Soviet Union]. The relatively good guys won. The utterly bad guys lost.
Nobody misses the China of 1977 or the Soviet Union of 1990. We should never forget the three-word description by Richard Grenier of the Soviet Union prior to 1991: “Bangladesh with missiles.”
Conclusion: there are legitimate things to be concerned about, but economic growth is not one of them. Western civilization is not verging on collapse. Neither is the world economy…“
I have known Gary North since the early 1980s. He just celebrated 50 years of continuous publication of his newsletters and books last month. He is now 75 years old and writes more today than he ever has — one of the most prolific writers I’ve ever known. Even when I don’t agree with him, he’s an inspiration. You can follow his work at: http://teapartyeconomist.com.
Two-Thirds of Workers Don’t Put Money in Their 401(k)s
Americans aren’t saving enough for retirement. That’s nothing new. I’ve been writing about the coming retirement crisis for many years in these pages. But now some disturbing new numbers show that the problem is much worse than we previously assumed. It’s probably been