Friday, December 12, 2008

U.S. 2008: Richest Year in World History?

It is very likely that the U.S. will have the most real GDP per capita in its history in 2008, despite the fact that the entire year will be spent in recession (by the employment definition).

Cross-country comparisons are not easy, and oil countries have had some very good years, but arguably the U.S. has the most GDP per capita in the world. U.S. 2008 might be the richest year in world history thus far!

Remarkably, one can have a reasoned debate as to whether U.S. 2008 was the richest in world history, but at the same time the news media characterizes 2008 as a year of "economic disaster"! Well, I'd rather have this "disaster" than, say, going back to 2004 GDP per capita.

Could it be that declarations of disaster are used as an excuse to steal our tax dollars?

2007 GDP (chained 2000 $) was $11,524 billion. 2007 population (July) was 301,621,157 --> real GDP per capita was $38,207.

Through Q3, 2008 GDP was $8,771 billion (seasonally adjusted by the BEA). 2008 population (July) was 303,824,640 --> 2008 produced $28,870 per person already through Q3. That means only $9,338 per capita ($2,837 billion in aggregate) needs to be produced in Q4 to break the 2007 record. In other words, if Q4 is within 3 percent of Q3, we break the record. Even the most pessimistic forecasters admit that Q4 real GDP will be greater than that.

[added: there is plenty of room to debate whether a couple of oil countries were momentarily richer (per capita) than the U.S. My point: the fact that you can debate these things shows that "disaster" is not an accurate description of 2008]

1 comment:

Bob Murphy said...

Why is the US ranked 6th in GDP per capita on this website? I've seen other rankings too, and the US is always in the top 10 but it's never the top. Why are your numbers coming out differently?

BTW I am prepared to trust your calculations; I'm sure if there's a different exchange rate or something you're using, that your rationale is better than the CIA World Fact Book. But I'm just curious why the numbers are so different.