US Economy Remains King

One thing that you rarely hear mentioned in the media is the incredible size and resiliency of the United States economy. My guess is that it is simply very difficult to put numbers that are measured in trillions into context. Plus, most of us have a bias towards negativity - it's a lot more alarming to hear about how other countries are taking over, or the US isn't what it used to be, blah blah blah. Yet looking at the data paints a different picture.

This chart from Charlie Robertson at Renaissance Capital reminded me of just how big of a number $17.97 trillion is:

The US economy alone is still greater than the next six developed G7 nations ($16.17 trillion) combined. As a percentage of the global economy, the United States accounts for roughly 22% of global economic production. Our market capitalization accounts for more than half of global stocks. The USA simply dwarfs the rest of the world, still.

Looking at the data, not only is our economy not slowing down, but it appears to be accelerating so far in 2015.

The headline GDP growth number is consistent but not overwhelming - about 2.7% annualized growth in the 2nd quarter after adjusting for inflation.

 Keep in mind though that this is a very backward-looking indicator - the second quarter ended more than three months ago, as we're now two weeks into the fourth quarter.

To get a view of what is going on more recently, we need to get under the hood. Let's start with doing so quite literally - here's vehicle sales in the USA through August. We're on pace to sell 18.2 million cars and trucks in 2015, which is a 10-year high and more than 80% more per year than at the lows of the economic crisis.

I pay pretty close attention to truck sales, specifically, with the theory that landscapers and contractors don't go out and buy pickup trucks if business is expected to be poor. Crossover vehicles are increasingly classified as light trucks which skews the data somewhat, but the trend is clear:

Why would someone invest in a truck? Maybe because construction spending in the US is increasing at nearly +14% per year:

Retail sales (after removing gasoline sales, which are obviously much lower than last year), American consumers are spending about +4.3% more than they were last year. That 4% trend dates back to mid-2009. This is a very important figure to track, since the US is primarily a service-based economy today:

It's too bad, as Ben Carlson points out, that I can't pay my utility bills ex-energy, though.

Banks are extending credit in the form of commercial and industrial loans at a growth rate of more than 10% per year:

Industrial production has been expanding throughout the summer, although not at the pace it was earlier during the recovery:

The employment situation has been pretty solid as well - the US has added about 200,000 net new jobs per month since mid-2010 (although +143,000 in September). Nearly all of the job gains have come from full-time workers:

And all of this is happening with little to no inflation - pick your yardstick:

All of this paints a very optimistic picture to how the US economy should finish 2015 and move into 2016. The US economy will likely remain king for a very long time.