{{featured_button_text}}

The United States is by far the world’s largest economic behemoth. With an economy of more than $21 trillion, it is 50% larger than China — the world’s second-largest economy. In fact, the U.S. economy accounts for almost 25% of the world’s total economic output. Excluding China, America nearly produces more goods and services in one year than the world’s Top 10 economies combined.

The size of a nation’s economy is measured by its Gross Domestic Product, or GDP. GDP represents the total dollar value of goods and services produced by a nation and serves as the key indicator of the health of an economy.

The relative size of the U.S. and Chinese economies convey the impact they have on the rest of the world. Combined, they account for more than 40% of the world’s economic output. Imagine dropping a large rock in the middle of a pond. The resulting waves spread out and reverberate across the water. That symbolizes the economic impact the U.S. and China have on the rest of the world’s economies. And when the U.S. or Chinese economy catches a cold, the rest of the world begins to sneeze.

The International Monetary Fund is a Washington, D.C.-based organization that promotes global financial stability and trade. According to its latest World Economic Outlook report, global economic growth in 2019 is expected to be just 3.2% — the lowest rate of growth since 2009. This is down from the projected growth rate in April of 3.3%.

Among the catalysts of this global decline is the continuing weakness of the Chinese economy. In 2018, China’s economy grew by just 6.6% – its slowest pace of growth in 28 years. In the first quarter of 2019, that rate fell to 6.4%. Two weeks ago, China’s second-quarter rate of growth was reported at 6.2%. According to China’s National Bureau of Statistics, economic growth in the second half of the year is expected to be even lower.

For the United States, our economy has fared much better. In 2018, economic growth surged to 2.9% — well above the historical 10-year average of just 2.175%. Economic growth in the first quarter was even higher, at 3.1%.

But the U.S. economy is currently at a crossroad. Weighed down by global economic weakness and the ongoing trade dispute with China, on Friday, economic growth in the second quarter was reported at just 2.1%.

Despite their respective economic setbacks, the U.S. is in a far better position to turn things around. Unlike China, America’s recent decline is generally viewed as a healthy economy going through a rough patch. But make no mistake, this sudden decline — regardless of how temporary — is an albatross on global economic growth. And given the impact the U.S. and China have on the global stage, the world is hoping both nations get their economies back on track.

Be the first to know - Sign up for Breaking News

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

Mark Grywacheski spent more than 14 years as a professional trader in Chicago, where he served on various committees for multiple global financial exchanges and as an industry Arbitrator for more than a decade. He is an expert in financial markets and economic analysis and is an investment advisor with Quad-Cities Investment Group, Davenport.

Disclaimer: Opinions expressed herein are subject to change without notice. Any prices or quotations contained herein are indicative only and do not constitute an offer to buy or sell any securities at any given price. Information has been obtained from sources considered reliable, but we do not guarantee that the material presented is accurate or that it provides a complete description of the securities, markets or developments mentioned. Quad-Cities Investment Group LLC is a registered investment advisor with the U.S. Securities Exchange Commission.

0
0
0
0
0