The GDP gap between Europe and the United States is now 80%
The GDP gap between Europe and the United States is now 80%
COLUMN. As after every crisis, Europe has been stalling since Covid-19, observes Arnaud Leparmentier, Le Monde's correspondent in New York.
It was early this summer, before Americans started crossing the Atlantic to savor the sweetness of European life. Prices are very much affordable for them there, and the Wall Street Journal gave the reason as being Europe's inexorable impoverishment: "Europeans are facing a new economic reality, one they haven't experienced in decades. They are becoming poorer," wrote the business daily. In 2008, the eurozone and the US had equivalent gross domestic products (GDP) at current prices of $14.2 trillion and $14.8 trillion respectively (€13.1 trillion and €13.6 trillion). Fifteen years on, the eurozone's GDP is just over $15 trillion, while US GDP has soared to $26.9 trillion.
As a result, the GDP gap is now 80%! The European Centre for International Political Economy, a Brussels-based think-tank, published a ranking of GDP per capita of American states and European countries: Italy is just ahead of Mississippi, the poorest of the 50 states, while France is between Idaho and Arkansas, respectively 48th and 49th. Germany doesn't save face: It lies between Oklahoma and Maine (38th and 39th). This topic is muted in France – immediately met with counter-arguments about life expectancy, junk food, inequality, etc. It even irks the British, who are just as badly off, as evidenced in August by a Financial Times column wondering, "Is Britain really as poor as Mississippi?"
Europe has been (once again) stalling since Covid-19, as it does after every crisis. The Old Continent had been respected as long as Germany held out. But Germany is now a shadow of its former self, hit by Russian gas cuts and China's tougher stance on its automotive and machine tool exports. The Americans don't care about these issues. They have inexhaustible energy resources, as the producers of 20% of the world's crude oil, compared with 12% for Saudi Arabia and 11% for Russia. China, to them, is a subcontracting zone, not an outlet for high-value-added products. The triumph of Tesla is making Mercedes and BMW look outdated.
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I was about to say you need to look at gdp per capita not just gdp, but I googled it and the eurozone has about the same population as the USA.
With such a large gdp difference, looks like Americans will be doing a lot of travel to Europe, and even more Europeans may be coming over here for jobs. It seems like half the people I work with are from Germany.
I am notsurprised. I am from Germany. The salary for the job i am doing has been stalling the last 10 years. Even though i am "doing a career", my salary raises are weak compared to inflation. I am in middle management of a big company and cant afford a fckn house, while people on this position 20 years ago have 3 now. I hate it.
Hate to tell you this, it’s no different here in the states. Wages have not been remotely kept track with inflation and home ownership is out of reach of most of the population
that's true of everywhere in the developed economies.
we value assets more than we value labor. so assets get more expensive and labor is cheaper. and since the rich are getting richer at an unprecedented rate, it's not going to change unless we have a serious social collapse.
That is mostly true here as well. From what my German coworkers tell me (and from what I see in job postings), salaries here are generally higher, even after paying for medical care etc. this is in the sciences but I’ve heard it’s true in other fields as well.
Yes, they are higher but many calculations say that the end earnings ppl have after all deductions are higher in Germany than in the US. So Americans get payed more but go home with less disposable income. I am no economist though, so... Idk
What you want to compare is how common people are living in a coutry and how much they can actually buy. That's what PPP is for ("purchasing power parity").
No, that's the wrong metric here. PPP compares prices not earnings for the sake of establishing a standardized "currency" to compare against. It doesn't say how many of the compared products can be bought with a median income or anything.
Ok, you're right. You'd also need the median income to have an objective overview how people live in the country.
No I think you're on to something with the per capita point.
US population went from 304million to 333million in that time (+29 million).
Euro population went from 334million to 344 million (+10 million).
3x the population growth probably helps nominal GDP numbers look better than they really are comparatively. It's not the whole story but it's some of it.