Last time in this series, I talked about the ground view of how a LBO firm works. Check it out here if you missed that one.
This week on Finance for HR Nerds: Let's talk about GDP and the size of the American economy.
First, the definition: GDP stands for Gross Domestic Product, which Wikipedia defines as is the market value of all officially recognized final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living.
Many of you knew in broad terms what GDP was. But do you know the size of the American economy compared to other industrialized nations when defined by this metric?
I was moved to write on this today when I was reading an BusinessWeek article that talked about some bogus bonds from the 90s that the Russian governement was balking on paying. The size of the bond that was due was in the range of 750 Billion, which BW cited as being about half of Russia's GDP. Thus, it was unpayable without collapsing everything else.
Then I thought - wait! Didn't the USA peel off a bailout in the same range (700-800 Billion) like we were paying off a bar tab? How much bigger is the American economy than Russia's?
As it turns out, a lot bigger. America's GDP is kicking in the 15 Trillion range, while Russia is kicking it old school at 1.5 Trillion or so. No wonder Reagan spent them into the ground.
Wondering how the USA compares in size to China? 2X (think it's up to 7 Trillion now. France? 5+X. Get a rough chart from 2010 to the side courtesy of Wikipedia to the right and find your favorite also ran.
USA = 25% of the world's economy.