The Economy & You #9: Comparison of National GDPs
TheUnited Stateseconomy (or GDP) was estimated to be $14.6 trillion in 2010 making it the largest national economy in the world. Still, how does theU.S.gross domestic product compare to other nations? One way people compare GDP between countries is with GDP per capita. This divides the country’s economic output by the number of people. It provides a general idea of how wealthy a nation may be.
According to estimates (http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP), theU.S. economy is larger thanChina (#2) andJapan (#3) combined. The list ranks the countries by their GDP which is the market value of all final goods and services produced within a nation in a given year. The GDP dollar estimates are calculated using market or government exchange rates.
According to some sources, the European Union economy is larger than that of the United States. Because these are estimates, this may or may not be true. Still it is important to note that the Eurozone is comprised of 10 nations (http://en.wikipedia.org/wiki/Eurozone).
Comparisons of national wealth are also frequently made on the basis of purchasing power parity (PPP), to adjust for differences in the cost of living in different countries. PPP largely removes the exchange rate problem, but has its own drawbacks; it does not reflect the value of economic output in international trade, and it also requires more estimation than GDP per capita.
The rankings do not take into account differences in the cost of living in different countries, and the results can vary greatly from one year to another based on fluctuations in the exchange rates of the country’s currency. Such fluctuations may change a country’s ranking from one year to the next, even though they often make little or no difference to the standard of living of its population. Therefore these figures should be used with caution.
Nevertheless, if you are still wondering just how big our economy is, take a look at this map that renames our 50 states with countries that have a similar GDP. http://www.economist.com/blogs/dailychart/2011/01/us_equivalents From this one can see that our economy is the strongest and largest economy in the world, even with the recent downturn.