The Power of the U.S. Economy
The economic power of the United States is matched by no other country around the world, even though it's no longer the world's largest economy.
America Produces 16% of the World's Total
Total output for the U.S. economy in 2014 was $17.46 trillion, 16% of the world's total output of $107.5 trillion. It is only slightly outranked by China, at $17.63 trillion and the European Union, at $17.61 trillion.
The next three combined produce less than the United States: India ($7.27 trillion), Japan ($4.81 trillion) and Germany ($3.62 trillion). Please note: these comparisons are made using purchasing power parity, which takes into account the effect of exchange rates. (Source: CIA World Factbook, Rank Order GDP)
In fact, the GDP of most countries are the same as many U.S. states. For example, California produces as much as France, Texas as much as Canada, and even tiny Rhode Island as much as Vietnam. Here's a map that shows more. Find out the States With the Best Economies.
The U.S. Economy Provides One of the Highest Standards of Living in the World
The power of the U.S. economy is seen in its GDP per capita, which was $54,800 in 2014. The Gross Domestic Product per capita effectively measures a country's standard of living. Nineteen countries have a higher GDP per person, but most of these are either financial centers, oil-exporting countries, or both.
Although China is the world's largest economy, its GDP per capita was only $12,900.
Think of the incredible economic power it takes to both one of the largest economies in the world while producing one of the highest standards of living per person. While other countries, such as Norway and Bermuda, have higher GDP per capita, they aren't the driver of the global economic engine like the United States of America.
America Has Four Advantages
America had a huge head start thanks to its abundance of natural resources. It has thousands of acres of fertile land, lots of fresh water, and abundance of oil, coal and natural gas. Its large land mass is bordered by two large coastlines that provide ports for commerce. For more, see How Natural Resources Boost the U.S. Economy.
In addition, it's governed by one political system, monetary system and language. This gives it a comparative advantage over the world's second largest economy, the European Union. The EU is made up of 28 separate member countries with different political systems and languages. This makes it more difficult to manage its single monetary system unified by the euro.
A third advantage is that America has two peaceful neighbors, Canada and Mexico. That means it doesn't have to defend its borders, and it allowed the creation of the world's largest trade area, NAFTA. This gives America an advantage over the world's largest economy, China. That country's largest neighbors, India, Russia and Japan, don't have the same peaceful natures or history. That makes any trade agreements enormously more difficult.
A fourth advantage is its large and diverse population.
This allows companies to test market products before incurring the expense of bringing them to market. That lowers product development costs, which encourages innovation. This has created global centers of innovation: New York for finance, Silicon Valley for technology, and Hollywood for entertainment.