US slump may not be a cyclical phenomenon

The negative employment report on February 1 was another sign the US economy is on the ropes. Increasingly, this downswing is being portrayed as more than just a cyclical phenomenon. The US used to be the envy of the world, the story goes, and soon it will be just another nation.

The question no longer seems to be whether the US will recede into the pack, but rather, who is to blame. The New York Times recently explored that question with a provocative cover piece in its Sunday magazine by Parag Khanna, entitled "Waving goodbye to hegemony"

But has the US's position in the world really changed? In terms of gross domestic product, the US has been an economic colossus for a long time, and continues to be so.

Economist Angus Maddison writes in his book, "The World Economy: a Millennial Perspective," that America's share of world GDP peaked at almost 28 per cent in 1951, up from 1.8 per cent in 1820, 8.8 per cent in 1870 and 18.9 per cent in 1913.

The US share of world income then declined consistently until 1975, when it accounted for 21 per cent of world GDP. It has been roughly the same since.

Maddison, who has compiled global national-income data for the world from 1 A.D. to 2001, estimates the US share of world GDP was 21.4 per cent in 2001. Since then, growth outside the US has picked up, while the expansion inside the US has slowed.

According to the International Monetary Fund, which offers more recent statistics, the US accounted for 21.0 per cent of world income in 2001 (which is close enough to Maddison's estimate to allow one to draw on both); it declined to 20.0 per cent in 2005.

Such a minor deterioration may just be cyclical, and is hardly magazine-cover material. The US economy continues to be positively awe-inspiring compared with the competition. The value of US imports in 2006 was roughly the same as the entire GDP of France. The US is the world's largest exporter; indeed, if all US exporters banded together and seceded from the country, they would have the eighth-largest GDP in the world.

The economy of Brazil is about the size of the economy of Texas.