how economies stack up

I’m using Purchasing Power Parity calculations from the IMF.  Traditional GDP uses only the prices of traded goods in figuring the size of the output of national economies.  PPP, in contrast, tries to estimate the value of non-traded goods as well–like the price of a haircut, a movie, eating out–and adjusts output up or down accordingly.  Because of this, PPP gives a better idea of how well off the typical resident is than the conventional measure.


US   #1     $2.8 trillion

Japan  #2   $1.0 trillion

China  #11    $0.3 trillion


US  #1     $6.0 trillion

Japan  #2     $4.2 trillion

China  #5     $1.1 trillion


US  #1     $10.3 trillion

China  #2     $3.7 trillion

Japan  #3     $3.4 trillion


US  #1     $15.0 trillion

China  #2     $12.4 trillion

India  #3     $5.3 trillion

Japan  #4     $4.5 trillion


China  #1     $27.4 trillion

US  #2     $21.4 trillion

India  #3     $11.4 trillion

Japan  #4     $5.7 trillion

Source:  International Monetary Fund

Note:  I haven’t included the EU as a separate entity, partly because membership hasn’t been static over the years, mostly because the UK, 10%+ of the total, will presumably leave the EU before the end of 2019.  If the current EU were a single country it would be #2 on the list, 5% – 10% bigger than the US.

China doesn’t include Taiwan, Hong Kong or Macau.  If we tossed in all three, Greater China would be maybe 5% bigger than listed.


On the 2019 numbers, China’s economy is 28% larger than that of the US.  China has 4.3x as many people as the US, which implies that per capita income in the US is 3+x of that in China.

American investors have historically approached China by figuring that the top 10% of the population, 140 million people or so, have incomes that are at the US median or above.  If so, the market for US consumer and luxury goods in China is probably about the same size today as the domestic market   …and it’s growing much faster.  And US-made goods have had much better acceptance in the Pacific than in Europe.  Hence, the attraction.

If the US is now in a competition with China for technological superiority, we should probably be looking at another set of metrics:  the number of scientists and engineers trained, the number employed in industry and the size of R&D budgets.  Yes, it’s certainly better to have one person who can high jump 10′ than ten who can jump 1′ each, but I don’t have any way of trying to figure where the next superstars are going to come from.  So aggregate figures will have to do.  My quick Google search indicates a surge in STEM undergraduates in China over the past ten years, which now outpaces the US in numbers.  Chinese science PhDs awarded are now roughly equal to their US counterparts.  A significant number of US PhD science students are from China (I don’t have good figures, though).  About 40% of the science PhDs now working in the US are foreign-born.  That percentage has been shrinking since the start of the Trump administration.






navigating through confusion

a (very) simple sketch


what has changed?



–ultra-low interest rates, negative in parts of Europe





more tomorrow




the Fed’s dilemma





recent past




Enter the Trump tariffs.

Two preliminaries:





the dilemma



what to do on a rebound day



Watching and analyzing.





