The U.S. economy is the largest economy in the world.
However, it wasn’t always the largest.
And it’s unlikely to remain the largest economy for much longer.
The chart above comes to us via Deutsche Bank’s Jim Reid.
“As Alexander, Rome and Britain fell from their positions of absolute global dominance, so too has the US begun to slip,” Reid writes. “America’s global economic dominance has been declining since 1998, well before the Global Financial Crisis.
“A large part of this decline has actually had little to do with the actions of the US but rather with the unravelling of a century’s long economic anomaly. China has begun to return to the position in the global economy it occupied for millenia before the industrial revolution.”
One look at the chart, and it’s pretty clear that it may not be very long before we start saying the U.S. is number 2.
“Based on current trends China’s economy will overtake America’s in purchasing power terms within the next few years,” Reid continued. “The US is now no longer the world’s sole economic superpower and indeed its share of world output (on a PPP basis) has slipped below the 20% level which we have seen was a useful sign historically of a single dominant economic superpower.
“In economic terms we already live in a bi- polar world. Between them the US and China today control over a third of world output (on a PPP basis).”
Reid offered this prescient quote from Napoleon Bonaparte: “”Let China sleep, for when she awakes, she will shake the world.”