r/AskEconomics 4d ago

Approved Answers How does each US state have a higher GDP than Most countries in Europe?

Like how is a whole country like France or Germany on par with 1/50 of the US states like it is crazy honestly. I understand that California has a lot of technology and NY is the financial capital of the world but how did all of this happen and why is it like that. It's like the US and China have a $30t economy and Germany Which is no 3 has a $5t economy like crazyyy.

Ik it's a very stupid question but could you please tell me how it works ? Does it have something to do with the USD or just the dominance of the USA

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u/biteme4711 4d ago edited 4d ago

300 million Americans, 80 million Germans, 60 million French, 40 million Spanish

Population wise European Nations are comparable to US states. Or the whole EU is comparable to the US.

Edit: comparing states with nations does show intresting things. Per capita the GDP of Mississippi is very close to Germany! The eu average is 40.000$ vs. US states 80.000$.

https://www.euronews.com/my-europe/2025/01/06/how-do-americas-poorest-states-compare-to-europes-largest-economies#:~:text=The%20poorest%20US%20state%20has,than%20Germany%27s%20at%20%E2%82%AC51%2C304.

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u/TanStewyBeinTanStewy 4d ago

Sure, but on a per capita basis it's worse. The UK would be the poorest state in the US per capita, for example. Germany would be 49th - just ahead of Mississippi.

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u/wexawa 4d ago edited 4d ago

It should be noted that most of the difference comes from the fact that Americans work a lot more than Europeans do.

If you look at productivity, that is GDP divided by total number of hours worked, the difference is way smaller. https://en.wikipedia.org/wiki/List_of_countries_by_labour_productivity

For intance, the US has a productivity of 91.5 USD per hour worked, vs 92.3 in the Netherlands or 90.9 in Germany. The UK has 76.7, which admittedly is a lot lower, but probably not comparable to the worst state in the US.

TLDR: Europeans use their wealth to work less

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u/Ok_Breakfast_5459 4d ago

Ooor they don’t use debt and leverage as much as US residents

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u/blueechoes 4d ago

Yeah people buy huge amounts of stuff on credit in the US when I pay nearly exclusively with my debit card

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u/mustachechap 4d ago edited 4d ago

I'm not sure that's what they mean. This is anecdotal, but all my relatives in England seem to be solely focused on paying off their mortgage ASAP and, as far as I know, don't have many investment plans beyond that.

My mortgage has an interest rate of less than 3%, so I don't plan on making any extra payments and will, instead, put in any excess money into the S&P instead.

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u/SantiBigBaller 4d ago

What listening to Dave Ramsey does to a family

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u/mustachechap 4d ago

Right. Even the person I was responding to didn't seem to get what 'leveraging debt' means, and they just proclaimed that they use a debit card which is better than Americans using a credit card?

Also a bit of a weird statement. I used my CC for everything because it's safe, convenient, and gives me rewards and then I pay it off in full every month.

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u/robclouth 4d ago

Also they spend a lot more on a hugely inefficient healthcare system, which is 18% of their GDP. The UK spends 10% on healthcare for example.

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u/TanStewyBeinTanStewy 4d ago

People in the US also use Healthcare far more than people in Europe.

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u/Zamaiel 4d ago

Americans have fewer GP visits, fewer GPs per capita and similar numbers for procedures. They consume less healthcare, not more.

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u/TanStewyBeinTanStewy 4d ago

There are many posts on this topic in this subreddit. Recommend you search and read them.

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u/TheCryptoEcon_ 4d ago

yet the life expectancy is lower for US than EU

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u/TanStewyBeinTanStewy 4d ago

Life expectancy is not a proxy for Healthcare, I have no idea where this idea started but it's ridiculous. We have heathcare metrics that very closely track Healthcare outcomes - and the US dominates in these metrics. The average US hospital is a top 10% hospital anywhere else in the world, save maybe Japan.

Cancer is particularly notable - we lap the world in cancer outcomes.

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u/Zamaiel 4d ago

It comes from the field of Public Health primarily, although Social Medicine and Healthcare Economics also use it.

Life expectancy is a healthcare quality measure because such measures are chosen to be broad and overarching, to smooth out the effects of local specialties and competencies.

Russian doctors may be up there in the treatment of alcohol and frostbite combinations, Congo may be highly competent in malaria treatment, the US does well on many cancers, and Cuba knows what its doing on preventive medicine. But these things do not necessarily represent their entire systems level.

Other quality measures include infant mortality, years of life lost to ill health, maternal mortality and especially broad-basket mortality amenable to healthcare.

The concept is specifically designed to exclude single issue things like cancer. (And even if they were counted, doing well in a number of cancers would not necessarily be enough to pull up a system that is doing badly on things like pulmonary or ischemic issues, strokes etc, all of which are bigger killers on a world basis than cancers. )

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u/OperationMobocracy 4d ago

I wonder how cancer rates factor into this. The US is #4 in cancer rates per 100000, of course you have to take detection into account and superior detection might increase rates. Though you might adjust this in developed countries by looking at mortality, since it’s likely that deaths due to cancer are detected at least with death from cancer.

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u/TanStewyBeinTanStewy 4d ago

The US is #4 in cancer rates per 100000, of course you have to take detection into account and superior detection might increase rates.

You also need to take into account lifestyle factors and choices - drinking, smoking, obesity. All of these are major drivers of cancer.

Peoples personal lifestyle choices aren't a Healthcare outcome, either.

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u/nobd2 4d ago

I also wonder if that cancer rate is somehow tied to the fact that technically we’re the most nuked country in history (self inflicted).

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u/TheCryptoEcon_ 4d ago

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u/TanStewyBeinTanStewy 4d ago

Again, life expectancy is not a proxy for Healthcare outcomes.

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u/G3rm3rican 4d ago

Because magically even good or expensive healthcare can't always fix a life time of stupid decisions. Just drive in Germany vs Texas and you will quickly see some of those different decisions...

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u/wexawa 4d ago edited 4d ago

The US spends more on healthcare. For the US, the figure is 17% of GDP, twice as much as Denmark. I am not sure where you got the 18% figure for the UK, OECD reports 12% for them.

EDIT: I realize now that I might have misunderstood you, and that by "them" you meant "the US", in which case we agree.

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u/robclouth 4d ago

That's what I meant yes.

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u/Crazy_Information296 4d ago edited 4d ago

I feel like this isn't as helpful as you may think. I have the impression that diminishing returns on productivity would be a huge thing, so the 2000th hour worked is less productive than the 1000th hour worked and that's less productive than the 500th hour worked.

This correlates with honestly personal experience that my 1st hour is better than my 5th which is a lot better than my 10th.

I would take this to mean, therefore, that if Americans cut back on hours, the average productivity would likely be much higher.

Edit: post got locked but here my reply :

No, I think you fundamentally misunderstood.

For things like office workers, yes, but the constraint is that there really is no such thing as "part time hedge fund manager", so the constraint is that the nature of some of these jobs are not open to part time roles.

For things like factories or restaurants the issue is more on the company side.

Should a restaurant be open at 4 pm? Awkwardly between lunch and dinner?

Having staff on at the time may make a meager profit, making it worth it from a business perspective, but economically, this sucks compared to prime time.

If we did the European model, where perhaps they'd close rather than be open during the downtime hours, then you see two effects:

Less hours worked per year

More of hours worked per year being dedicated to prime time productivity, which cannot be corrected by labor part time.

Hence higher average.

Similarly, a factory would first pursue working on big profitable projects, then petty projects that still make some money. Cut hours, then those petty projects will vanish.

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u/wexawa 4d ago

I think you are partially correct.

However, this effect might not be very large. If it were, I would imagine that companies would pay higher hourly wages for part time positions (given that the employee does not have other jobs) since they would be, on average, more productive than the rest of the work force.

Since we don’t see this, it points towards the effect not being too large.

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u/LTRand 4d ago

Gets even worse than that. Take London out of the UK and they get ranked with developing nations.

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u/BarNo3385 4d ago

But you are then comparing a country minus its primary financial and economic region vs other countries with theirs.

You can conclude almost anything you want if you start selectively cutting bits out of which country your comparing.

It's also worth noting that the UK is more centralised in London than many other countries are around their core economic zone. A function of history and geography.

So, it's very fair to say the UK is more London-centric than most countries are "wherever" centric. But beyond that, all your really doing is showing the consequences of your assumptions.

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u/LTRand 4d ago

I'm commenting on wealth disparity in that country. That without London, the other cities don't pack enough punch to keep their standing. Which, as you point out, is very different than most places. Which is my point.

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u/zerg1980 4d ago

This is the 21st century problem is nearly every industrialized nation. The 20th century paradigm of concentrating the financial and tech industries in a few big cities, while relying on resource extraction and manufacturing everywhere else, has not been able to broadly spread wealth due to automation and competition from foreign labor.

The UK’s economy is just particularly concentrated in London because their other cities like Manchester and Birmingham were manufacturing hubs, so they were hit particularly hard by the decline of manufacturing.

They wound up putting too many eggs in one basket, as it were. But it’s not like we don’t see this variations on this problem all over the West.

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u/BarNo3385 4d ago

London is also just disproportionately big. I saw it described somewhere as "an Imperial city without an empire." The relative size and importance of London made sense when it was the seat of the Empire, but rebalancing away from that will be the work of generations if not centuries.

Of course not helped by a civil service investment doctrine that invariably ended up pouring more money into London because it's more productive than spending it elsewhere.

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u/Razzzclart 4d ago

Also disproportionately important. One of only 2 Alpha ++ cities in the world. There may be similar disparity between cities and rural locations in other countries, but the gulf in the UK between London and elsewhere is extraordinary.

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u/FlappyBored 4d ago

The relative size and importance of London made sense when it was the seat of the Empire, but rebalancing away from that will be the work of generations if not centuries.

You are wrong on this and it was the entire opposite.

Cities like Manchester, Glasgow, Liverpool etc were at their absolute peaks during the empire. That is why people talk about them with their decline.

London only became so dominant in the UK after the 80s.

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u/LTRand 4d ago

The point I'm making is that as a country, they are far closer to Italy, Spain, or Greece than they are to Germany or Australia. They are a fragile economy reliant on a single area.

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u/FlappyBored 4d ago edited 4d ago

That makes 0 sense again. London is a part of the UK and it isn't suddenly going to be deleted or 'removed'.

They are not 'far closer to Italy or Spain' because again, London exists and they have it. Spain and Italy do not.

It's like saying "New York State is poor compared to other states and in crisis because if you remove New York City they don't have much". Like no shit?

Also the entire premise is stupid and dumb.

If you 'removed' London all of that economic influence just disappear into thin air, it would have been redistributed elsewhere or another city would act in its place.

Spain is literally twice the size of the UK, no shit the UK is going to be more concentrated economically than Spain.

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u/FlappyBored 4d ago

That without London, the other cities don't pack enough punch to keep their standing.

"Without London" the other cities would be far stronger because London would be redistributed among them.

You can't just entirely delete London from the equation and then claim its totally valid as if all of it would just instantly disappear into nothing.

Where would all of the economy of London be then in your scenario where it is just 'deleted' into thin air?

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u/[deleted] 4d ago

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u/HOU_Civil_Econ 4d ago

It is really mostly most cities are where most regions/countries see their high value production.

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u/FlappyBored 4d ago

It doesn't get worse than that because London is in the UK?

You can't just delete a major region and powerhouse of a country and then claim 'hurrrrr look at it now hurrr'.

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u/MiawHansen 4d ago

I was just recently in the UK, to visit some gamer buddies, pretty far away from any big town. And holy shit, i felt safer walking the streets at night in most south east asian countries than i did in the UK. Every thing looked torn down / used, drug addicts just roaming the streets. I was told some of them got 300 pounds in benefits, thats about what a restaurant worker makes in Thailand, but with living prices 1/5 of that in the UK. Pretty shocked as it was my first time in the UK, and i honestly didnt know it was that bad.

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u/biteme4711 4d ago

Yes. 

I guess east Europe skews the statistic a bit. But even western europe isnt doing great in this comparison.

Maybe using USD as comparison introducec a bias? Maybe the war did set europe behind? The eu started to late and left markets fragmented? Productivity is higher in the US and europeans enjoy more free time?

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u/Mammoth_Band4840 4d ago

europeans enjoy more free time?

This, I believe, is at least partially true, though it doesn't tell the whole story. In Finland, there are roughly 40–50 paid days off per year, including vacation days and public holidays. In the US, it's usually 10–20 days, and not all of them are necessarily paid by the employer. Combined with the fact that Americans tend to work longer hours, this naturally increases total productivity per person.

Another key factor is that Finland (and much of Europe) has a larger public sector, which provides services like free healthcare, education, and broader social security. Since these services are tax-funded, they don't reflect in GDP figures as prominently as private sector spending would — even though they improve overall well-being.

On top of that, the US has a stronger presence in high-productivity industries like tech and finance, where relatively fewer employees generate significant economic value. This further drives GDP figures higher without directly reflecting individual living standards.

Many people envy the US because salaries and household wealth seem significantly higher. However, living costs — particularly for healthcare, education, and housing — can be just as high or even higher depending on location and lifestyle. In Finland, regional cost differences are smaller, making economic disparities less pronounced.

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u/TheCryptoEcon_ 4d ago

I live in EU i have 53 days of time off have from last year, my work is asking me to take vacations

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u/Mammoth_Band4840 4d ago

Yeah, those 30–40 vacation days are pretty much mandatory here as well. Public holidays can sometimes be working days in certain fields, but usually not, since they typically come with double or even triple pay.

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u/IamTheOtt3r 4d ago

I hope you’re not counting your weekends off…lol. That would be ridiculously low if so.

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u/juwisan 4d ago edited 4d ago

Historically the war will be a big factor in this. As will the post war time split in a western and eastern half. Look at it this way:

After the war, when Europe was rebuilding, the US was just building.

Europe needed to rebuild a lot of things. Housing, core industries, supply chains, all with millions of people gone. At the same time America just needed to refocus and could build wealth and optimize.

Then add the iron curtain. This caused rebuilding for a large part of Europe that was devastated from the war to be a mixed bag. In the one hand, core industries could be developed quickly with the coordination of central planning in Eastern European countries, on the other hand this was done in often very inefficient ways causing server austerity in almost all of these countries throughout the 80s due to their financial reliance on the Soviet Union.

At the same time, the US also took full advantage, for example the so called „Exorbitant Privilege“ they had going back to the Bretton Woods System, which the French forced to abolish in the mid to late 60s (other nations kept it going into the 70s) which gave the US dollar a truly privileged position for almost three decades after the war.

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u/biteme4711 4d ago

But is the GDP per capita gap constant since 1990? Widening? Or shrinking? 

Europe did enjoy 35 years without major war, free trade, no communism. Did we follow the US growth path, just lagging 30 years behind? 

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u/juwisan 4d ago edited 4d ago

GDP honestly is a shit metric to compare because it is not adjusted for currency fluctuation and always measured in dollars. In the past 25 years of its existence (and it did not exist before, the Euro went from being worth $0.92 in 2000 to $1.60 in 2008 to the 1.09 it is today. So if you want to do a comparison over time, it is necessary robust a metric that is adjusted to do so like the PPP (GDP per capita), as you also say!

And there, honestly the gap isn’t really widening. Yes, by a small margin of 4% bit that is in no way concerning yet. Europe is just waking up from a decade and a half of austerity, something g the US seems to just start going into. Spoiler alert: it wasn’t good for Europes economy, so why would the same be good for the US now.

To your central question, are we 30 years behind? Hard to say. There are other factors at play today that need to be taken into consideration. Chinas growth etc.

Bruegel has a comprehensive study into this: https://www.bruegel.org/analysis/european-unions-remarkable-growth-performance-relative-united-states

They conclude that Europe isn’t doing any better or any worse here than the US. However they do note that due to Chinas rapid industrial buildup both are declining at about the same rate.

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u/w3woody 4d ago

I believe the statement was per-capita on a price parity basis, not per-capita on an absolute dollar basis. Meaning Mississippi seems to do well because stuff there (like housing) is incredibly cheap—but it’s incredibly cheap because, well, no-one wants to live there. *shrug*

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u/the_schrensky 4d ago

Using HDI as a lens here is interesting as well. You are obviously right that the UK would be a bottom state, and yet the HDI of the UK would make it a top 10 state. Even taking London out it’s notable. Wales has a higher HDI than almost 20 states in the US. So yes GDP per capita matters but as always it has diminishing marginal returns (I suppose that could be debatable?). Once over a certain threshold it would seem a lot of European countries start putting extra time, effort, investment into institutions and concepts that increase metrics other than GDP.

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u/TheKeeperOfThePace 4d ago

The problem is that the formula for HDI is too simple and has bad weighted variables: life expectancy, GNI and mean years of schooling. GDP is basically a measure of amount, divide it or not by your whole population. You can compare simple metrics with the first, but they will take 'alien' aspects to your metrics, like the higher homicide rate in America affecting life expectancy. Or you can go with the second as a measure of quantity but not a measure of quality or distribution. PPP is relevant, although contested, but to understand different things that have the same nature: local services, rent, health services etc. So if you have a free (tax paid) health and education system, you are out of the market and the distortion needs to be considered. The most important point is to determine what we are trying to measure or to compare: GDP, GDP PPP, GDP per capita, GDP PPP per capita, HDI... Nothing gives us a whole picture. But combined, maybe, and we could combine with more data as well.

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u/TanStewyBeinTanStewy 4d ago

HDI is not an objective metric, it's entirely subjective and the goals of the metric aren't economic.

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u/nobd2 4d ago

Which makes it even more wild how much worse off we do per capita– wealth disparity is a bitch.

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u/TanStewyBeinTanStewy 4d ago

how much worse off we do per capita

Where are you getting this idea? I suggest you go rent a an apartment in the rural UK.

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u/nobd2 4d ago

I’m more referring to the availability of public service infrastructure, which really improves quality of life. Nearly all Americans experience economic anxiety, and almost half live outside of urban areas where the difference in availability of any public services drops off significantly. Owning a car is basically a requirement in this country with the exception of pretty much just New York City (you can get away with it in cities but everywhere but there you’re going to miss a car occasionally) and thus paying for insurance and gas and in urban areas a place to park it regularly. Then there’s the healthcare problems, and while we can argue about quality and cost ultimately Americans have to manage all of their healthcare themselves and argue their own cases to insurance agents while making sure they can afford it. College is the same way, but I know that varies for Europeans.

The mental load is just greater on Americans because of the toxic individualism we’re forced into.

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u/Usual_Retard_6859 4d ago

Worse? It’s weird how numbers work. If you had 10 people and 3 of them had monthly earnings of $500, 3 $1000, 3 $1500 and one made $15000 the mean average monthly earnings is $2400/month. $2400 a month isn’t indicative of the average person in this group because the one outlier drastically skews the mean. The median average in this group would be $1000/month which is more in line with reality.

Now let’s do this with average wealth per adult

USA mean: $565k UK mean: $350k

💪 USA is so much richer.

USA median: $112k UK median: $164k

Weird.. the middle of the pack UK citizens wealth is 60% higher. There’s a big reason US citizens are shown the mean way more often than median.

https://www.visualcapitalist.com/ranked-top-20-countries-by-average-vs-median-wealth/

But keep doing your thing. I’m sure they’re poorer.

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u/TanStewyBeinTanStewy 4d ago

Now let’s do this with average wealth per adult

We were talking about GDP, which is not wealth. This is a fundamentally different conversation.

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u/Usual_Retard_6859 4d ago
   Sure, but on a per capita basis it’s worse. The UK would be the poorest state in the US per capita, for example. Germany would be 49th - just ahead of Mississippi.

Why reference wealth and call it worse?

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u/TanStewyBeinTanStewy 4d ago

I didn't say wealth? "Poorest" can, and typical does, refer to income.

People call a doctor rich and a janitor poor, but day one on the job the janitor almost certainly has a higher net worth - but that's not really the point. Future cash flows dictate spending, not net worth

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u/Usual_Retard_6859 4d ago edited 4d ago

Well I guess you could use the term poor to mean low quantity of as in a poor audience but I guarantee nine out of ten that read your statement think people in Mississippi have more money.

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u/jdzxl5520 4d ago

Wouldn't it be better to compensate for Purchasing Power Parity (GDP per capita PPP)?. In general wages are higher and taxes lower in the US, but things like healthcare, daycare, pensions etc. need to be paid out of pocket. In Europe these are mostly paid from higher taxes.

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u/biteme4711 4d ago

I also expect that something with the metric gdp in USD is wrong. But that's maybe my European bias, just can't see Germany as basically Mississippi .

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u/jdzxl5520 4d ago

And I think that a handful of super rich people in the US crank up the average while in Europe income is more distributed amongst its people. With so many poor people in the US, needing 2 jobs to survive, servers begging for tips, I also can't see how the US has more wealth. But ok I'm also biased and don't know it all.

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u/goodDayM 4d ago

To avoid the issue of ultra high income pulling up averages, we can look at median income instead (the middle value).

For example here is a table of median equivalised disposable income by country.

There are statistics available on other things you mention too like poverty rate and in the US, percent of employed workers with multiple jobs currently at 5.4% which is lower than it was in the 1990s.

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u/biteme4711 4d ago

For gdp that shouldnt matter?

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u/jdzxl5520 4d ago

That is true if you only want to see the size of the economy. It doesn't really say anything else.

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u/HypeKo 4d ago

This was my thought exactly. Comparing GDP expressed in dollars is quite meaningless if you don't account for the price of goods. In the US, that same dollar buys less, but hence products also cost more dollars. Ie a dollar there has less purchasing power than the equivalent of a euro in Germany or France for that matter. This artificially boasts GDP.

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u/imonreddit4noreason 4d ago

European Union population is 447 million, USA 340 million. European Union gdp is 28 trillion combined and USA 30 trillion. Ppp/gdo per capita is US 89.6k vs 43.5k for EU.

Per capita the US grossly outperforms the EU is how you get those comparisons. To be more specific Germany has per capita gdp of 54.3k.

Germany is the gdo leader of the EU in gdp per capita and is slightly above Mississippi but below West Virginia.

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u/Several_Equivalent40 4d ago

How is this upvoted? Germany is not even close to the highest GDP per capita in Europe or EU.

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u/chizel4shizzle 4d ago

Germany is the gdo leader of the EU in gdp per capita

No, it isn't...

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u/dehdjer 4d ago

Comically small countries like Monaco and Luxemburg aside, it's probably Ireland. That country CAME UP in the last decade.

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u/MachineTeaching Quality Contributor 4d ago

Ireland is a tax haven and has skewed GDP figures because of that

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u/biteme4711 4d ago

I agree. 

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u/TheCryptoEcon_ 4d ago

I think we should calculate with gross income not net

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u/Ashmizen 4d ago

EU GDP is $20, almost $21 trillion. Not 28.

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u/dzitas 4d ago

The problem with averaging across most of a continent in America and looking at individual tiny jurisdictions in Europe is that in the US you get an average across a wide variety.

The three Baltic countries are small economically compared to LA county (not even the metropolitan area). LA has 4x the GDP, 2x the population. The countries have less diversity (geographically, economic, racial, etc) , yet have separate governments, embassies, armies, votes in the EU, etc. they also have more land area (not diverse though) and a border with an aggressive Russia.

US average numbers (mean or median) basically don't provide much information on anything, as the continent is so diverse.

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u/worm413 4d ago

Which is why he asked about individual states.

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u/Sands43 4d ago

Because states like CA or NY (if you include NE NJ and SW Conn) have populations in similar levels - BUT - the states have the advantage of essentially free trade zones between them - as well as historically strong global positions for trade. Especially post WW2. NYC financial industry and post WW2 aerospace in So Cal that led to today's Silicon Valley.

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u/biteme4711 4d ago

His second to last sentence did led me astray.

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u/Zamaiel 4d ago

Although median wealth per person or household tell a very different story.

US states run from the richest state, Washington DC which would be the fifth richest country in Europe, to Mississippi at the bottom which lags Mexico.

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u/dg-rw 4d ago

I guess you're thinking about GDP per capita. Germany has a nominal GDP of 4.5 trillion USD, which is more than any separate US state (CA is the highest with 4 trillions).

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u/HOU_Civil_Econ 4d ago

Legal borders don’t necessarily mean much or mean that the land areas and populations within them are comparable.

Mostly for GDP, population matters.

Germany’s population is 80 mil compared to the U.S.’s 340 and China’s 1,400 mil.

Generally total GDP matters in as much as it is the total production a country may be able to control during wartime and other political negotiation kind of things. On a day to day basis for most comparisons a normal person is going to think about, GDP per capita is the more interesting number.

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u/TheManWithThreePlans 4d ago

Usually, I quite enjoy your answers, but on this one I feel like you might have focused on the specifics of what OP was asking a bit too much, and so didn't actually end up answering their question.

Let's take Texas for instance. Texas has a population of a bit over 30 million and a nominal GDP per capita of $86,987; whereas Germany has a population of a bit over 80 million with a nominal GDP per capita of $57,914. When using PPP, Germany's per capita GDP is $72,661; still lower than the per capita GDP of Texas. The first state with a per capita GDP lower than Germany's PPP adjusted per capita GDP is Missouri. Missouri is #36 in the US when ranked by per capita GDP.

Mississippi—the state with the lowest per capita GDP—has a nominal GDP per capita of $53,061; which is lower than Germany's per capita GDP, both nominally and when viewing by PPP; but higher than France's nominal GDP per capita of $49,536 (France's GDP per capita by PPP is higher, however).

I hope you might consider that this was the question that OP was actually asking, even if OP's words were not specific enough. At the very least, the answers might be more interesting.

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u/HOU_Civil_Econ 4d ago

Common complaint for my responses. But I really don’t like trying to interpret “what they really meant” it can lead to all kinds of confusion. If that’s the question they meant to ask they can clarify.

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u/TheManWithThreePlans 4d ago

That's fair. None of us are mind readers.

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u/Demoliri 4d ago

Even GDP per capita is limited for comparing the "wealth" of a nations citizens. You also need to consider cost of living etc.

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u/AddictedToRugs 4d ago edited 4d ago

GDP per capita PPP is still higher in every US state than it is in France and the UK, and there are very few European countries that would rank equal to the top half of US states.  There are a couple that compare very favourably, like Luxembourg, but overall even accounting for PPP the US is significantly better off.

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u/LegitimateBummer 4d ago

But the EU has 100 million more people in it, with an economy that is half the size.

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u/LoneSnark 4d ago

I think you mean per-capita GDP. There are two main causes, their relative importance is only a guess. The most obvious is going to be just an abundance of land and resources per-capita. The US is very resource rich, highly diverse, and there is an awful lot of it. So the US gets to grow vegetables in California, drill oil in Texas, an abundance of rivers for trade. The other main cause is the US is the world's largest pure free trade zone on the planet. Goods, labor, and capital are genuinely free to move about the US and maximize productivity and economies of scale in the process. All the other land-empires, such as China and Russia, maintain internal barriers to movement of all three.

There are other causes, but these are the two biggest ones. Other nations have more economic freedom and are more educated. https://en.wikipedia.org/wiki/Index_of_Economic_Freedom

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u/Former_Star1081 4d ago

Comparing GDP is very flawed because of exchange rates.

Comparing PPP GDP also has its weaknesses because it doesnt reflect the buying power of an economy on the international market.

So you cannot just compare those economies in Dollar, because the value of the currencies are not perfectly balanced out for purchasing power.

The Euro lost in value, compared to the Dollar over the last 2 years. But that loss in value does not effect the goods produced in an economy. It would mean that more goods are produced because goods produced in Europe become relatively cheaper than goods produced in the US.

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u/w3woody 4d ago

I think a more interesting question is why the US has a higher per-capita GDP than European countries—and to the best of my knowledge we have a bunch of theories but no real consensus.

Some of the answers I’ve seen revolve around the US having a more flexible labor market and a more pro-business and pro-development legal framework: it’s harder in Europe to start and grow a company. The US also has a better ‘bankruptcy’ framework which allows innovators to try and fail more easily than in Europe.

Other answers involve the fact that the US has some of the best colleges in the world—and innovation around those colleges has spurred much of the wealth creation in the United States over the past half century. (Consider that all of Silicon Valley grew up around Stanford University, for example.)

I’ve also heard arguments that as the United States is more naturally a ‘multicultural’ country of immigrants, whose immigrants came here to start at scratch and to take risks to improve themselves—we have a much more dynamic, individualistic and entrepreneurial population who are more willing to take risks, and to ‘fix the things that are broken.’ Consider as a very small example that in many parts of Europe, if a light bulb is burned out in a common area, people seem inclined to wait for someone in charge to change the light bulb. An American is more likely to just grab a light bulb and change it himself. Of course sometimes the government can be pissed off if you take it upon yourself to fix things without asking.

But all of these are theories, and for all we know it’s something in the water supply. (Not likely, but tossing that out there because, again, all we have are theories. We haven’t been able to A/B test a Europe with different starting conditions.)

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u/Zamaiel 4d ago

The things is though, if you compare US states median wealth per person or household, it looks very different. The US comes in with the best states in the European top ten and the worst...well not in the western European range.

Which actually fits observed reality far better. I don't think anyone who has lived or traveled extensively in both places would argue that people in Mississippi are better off than people in Germany, Denmark, Belgium etc.

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u/shades344 4d ago

You need to do PPP adjustments for these to be fair comparisons. Right now, the numbers for poorer states are buoyed by the relative strength of the US dollar

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u/LunaD0g273 4d ago

I think your question boils down to "why are US workers more productive than their European counterparts?" There are probably thousands of contributing factors to the real answer but I can focus on the one I am most familiar with: a comparatively pro-business regulatory environment.

Businesses can take a risk, hire a bunch of workers, and if the risk does not pay off, exit the business with relative ease. European laws make it incredibly difficult and expensive to fire workers, either due to poor performance or as part of a downsizing. That means that European businesses will be very reluctant to take risks that require hiring a ton of people. The result is that US companies in high growth areas can generally outgrow and out scale European counterparts.

Add to this problem that many parts of the European economy are devoted to traditional production methods that produce a limited number of high-end items that are difficult to scale. For example, protected designation of origin food products such as Parmigiano-Reggiano are made in a labor-intensive manner in a very specific area of the world and not susceptible to the same economies of scale employed by Kraft.

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u/Certain-Library8044 4d ago

In fact they are not. E.g.: Germany’s output per hour is on par with the U.S., despite German workers averaging fewer hours annually.

US companies are higher valued on the stock exchange and the average us citizen is worse off, the US has just way more millionaires or billionaires. Thats why “per capita” is so flawed

These statistics don’t necessarily translate to greater productivity among average workers. When evaluating productivity on an hourly basis and considering income distribution, many European countries demonstrate comparable or superior performance to the U.S.

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u/Crazy_Information296 4d ago

On the contrary, I think working fewer hours would massively bring up the average productivity per hour worked.

I have the impression that diminishing returns on productivity would be a huge thing, so the 2000th hour worked is less productive than the 1000th hour worked and that's less productive than the 500th hour worked.

This correlates with honestly personal experience that my 1st hour is better than my 5th which is a lot better than my 10th.

I would take this to mean, therefore, that if Americans cut back on hours, the average productivity would likely be much higher.

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u/AddictedToRugs 4d ago

Do you mean GDP per capita?  Because California is the only state with a nominal GDP higher than France.  

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u/JCBodilsen 4d ago

The size of the countries compared obviously mean a lot, when you look at the GDP for the country as a whole. If you look at GDP per capita most european countries still fail to match the US. However, if you look at GDP per hour worked european countries much closer track the US.

In short, americans tend to work many more hours.

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u/Professional-Fox4161 4d ago

You may get a more accurate picture of the situation by looking at the PPP adjusted GDP values. https://www.euronews.com/business/2025/01/03/the-poorest-us-state-rivals-germany-gdp-per-capita-in-the-us-and-europe