The U.S. is the world’s largest national economy. In 2013, the U.S. reported gross domestic product (GDP) of $16.8 trillion, or 22.4% of global GDP. China was a distant second at $9.2 trillion. Japan’s economy was the third largest in 2013 at $4.9 trillion, with Germany ($3.6 trillion) and France ($2.7 trillion) rounding out the top five.
The U.S. is also the second largest economy by region. In 2013, U.S GDP of $16.80 trillion was just slightly behind the entire European Union at $17.35 trillion.
As the world’s biggest national economy the U.S. is also its economic engine. That’s because the U.S. is the largest consumer market in the world. In 2013, consumer spending accounted for 71% of the U.S. economy.
As goes the U.S., so goes the global economy. Since the stock market crashed in 2008, U.S. economic growth has been weak. In 2008, the U.S. reported negative GDP of -0.03%; in 2009, it slipped further to -2.8%. Since then, the U.S. economy has experienced uneven growth. Most recently, in 2013, the U.S. reported GDP growth of 1.9%.
Going forward, the International Monetary Fund (IMF) has cut its outlook for global economic growth, saying there are limits to the United States’ ability to shoulder the world’s economy on its own. Before the financial crisis, the U.S. routinely advanced at around 3.0% annually. For 2014, the IMF expects GDP to grow 2.2% and in 2015 it expects the U.S. economy to advance 3.1%.
Traders received another piece of disappointing economic data, suggesting the U.S. economic outlook isn’t as rosy as many economists believe.On Tuesday, June 30th, the Institute for Supply Management (ISM) reported Midwest manufacturing activity declined last month. In May, the Chicago Purchasing Manager Index (PMI) climbed. Read More
To gauge activity in the global economy, I follow two indicators very closely: how sales at multinational Caterpillar Inc. (NYSE/CAT) are faring; and trade activity in the global economy.Global Economy Indicator #1The chart below plots the percentage change in three months rolling sales at Caterpillar Inc., a large American company. Read More
U.S. consumer confidence jumped up to a five-month high in June, signaling the U.S. economy is picking up momentum.The University of Michigan released its final results on consumer confidence for June 2015. The Consumer Sentiment Index rose to 96.1 in June, a six percent increase compared to May’s 90.7, and a more dramatic 16.5% gain. Read More
According to the Congressional Budget Office (CBO), the U.S. budget deficit will grow from three percent of gross domestic product (GDP) today to six percent of GDP by 2040. (Source: Congressional Budget Office, June 16, 2015.)With the CBO expecting GDP in 2040 to be $31.4 trillion, six percent of that number would equate to a budget. Read More
The U.S. economy contracted less than expected during the first quarter, boosted by strong household spending, inventories, and residential fixed investment.On Wednesday June 24th, the Bureau of Economic Analysis (BEA) released its third and final estimate of the U.S. gross domestic product (GDP) for the first quarter of 2015.. Read More