The United States is seen (and often acts) as the world’s leading economic power. And it is… in terms of gross domestic product (GDP).
But GDP numbers can be grossly (pun unintended) misleading. GDP numbers value a $5 cup of coffee at Starbucks 20 times more valuable than the same paper cup of coffee sold at a coffee shop in Guangzhou for the equivalent of 25 cents.
This is where PPP (purchasing power parity) comes in: GDP numbers adjusted with respect to the typical cost of living in the country in question. PPP offers a far more realistic metric for comparing national economies and their relative output.
And this leads to a rather sobering picture, courtesy of Visual Capitalist:
Yes, China is the world’s leading economy in terms of raw output. By far. Its economic output surpassed that of the United States more than a decade ago even as the US remains (for now) more influential.
And even Russia’s much maligned economy is larger, at least in terms of PPP, than either Japan’s or Germany’s.
This chart puts efforts to “Make America Great Again” through tariffs, or efforts to control political adversaries like Russia or China through sanctions in a whole new light. Even for the world’s largest economy, such control is a double-edged sword. For the world’s second largest economy? Much more likely, economic suicide.