Crash and Burn: EU Overtakes US in GDP Terms

♠ Posted by Emmanuel in , at 3/14/2008 05:02:00 PM
The American Dream has been foreclosed. Wall Street biggies on the verge of collapse, massive budget and trade deficits, a personal savings rate less than zero, a currency becoming more worthless with each passing day...the list goes on and on. Now, you can correctly say that this comparison is not a fair one--the EU is an economic union and not a country by any stretch of the imagination--but the consequences of this loss of American prestige is unmistakable. As the US dollar plumbs new depths on a nearly daily basis, the result is that the valuation of EU output has overtaken that of the US. This is certainly not the time for playing John Denver songs.

Can the US fight back and come out stronger? That is the question. As "dark matter" author Ricardo Hausmann suggested, perhaps it's time the US stopped behaving like the whiner of first resort and got its act together. Consume less, produce more things that the rest of the world wants...there are so many ways to right things Stateside. But the will to do so will have to come from within. At the moment, that is hard to find. From Reuters:

The U.S. economy lost the title of "world's biggest" to the euro zone this week as the value of the dollar slumped in currency markets.

Taking the gross domestic product of both economies in 2007, the combined GDP of the 15 countries which use the euro overtook that of the United States when the European currency surged to a record high of more than $1.56 per euro.

"The curious outcome of breaching this latest milestone is that the size of the euro zone's annual output has now exceeded that of the U.S.," the economics department of Goldman Sachs, the Wall Street investment bank, said in a note to clients.

Taking official estimates of 2007 GDP -- $13,843,800 billion for the United States and 8,847,889.1 billion euros for the euro zone -- the economy of the latter passed the United States once converted into dollars, shortly after the euro topped $1.56.

The dollar sank to $1.5688 per euro late in European trading hours on Friday, at which rate the euro zone's 2007 GDP equates to $13,880,568.4 billion.

The 2007 GDP estimates are as published by the U.S. Commerce Department's Bureau of Economic Analysis and provided to Reuters on request for the euro zone by Eurostat, the European Union's statistics office.