Europe’s GDP is keeping pace with America’s just fine. Why do we constantly hear the opposite?
Because we have a lot of neoliberal to economically conservative governments in Europe who want us to work more, harder and for smaller wages.
this post was submitted on 03 Mar 2026
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We hear the opposite because it's in someone's interest we hear the opposite.
Interesting article. There are a few other reasons why the comparison actually favours Europe:
- GDP is usually reported as aggregate, instead of per capita, meaning population growth is an important factor.
- The US is the world's largest oil producer. A significant chunk of its GDP is simply pulled from the Earth.
- GDP is inflated due to the presence of paper headquarters of multinational corporations. (In Europe, this also skews the numbers for Ireland. For Europe as a whole, it skews the numbers in the US' favour.)
- GDP (or the article's rgdpo) still only estimate the market price of the output of goods (possibly corrected for purchasing power). The US spends more on health care, for worse outcomes. That's part of the reason why quality-of-life metrices have the US tumbling down, typically to below 20th place globally.
- The gap further widens once you start taking into account the cost of climate change as effectively negative production.
In the end of the day, metrics on quality of life are much more relevant than GDP. For years we heard about the decline of the Japanese economy, it continues however to have indisputably the best quality of life in all of Asia.
Japan rezoned their housing federally to allow housing to be built, which dramatically lowered their housing prices. Many country in Europe I think usually do the opposite.
Thank you for sharing this. The explanations were very clear and made me aware of a measurement issue in GDP statistics that I've never heard of before.
And if GDP wasn't keeping pace, why would that be a bad thing? It's not like growth has meaningfully improved peoples lives in the last couple decades
The issue is that Europe has a relatively good social safely net. An economy with little growth and more of its people retired are going to cause a decrease in benefits per person.
We have PLENTY of average benefits per person already. Currently most benefits go to rich people in the form of public investments in private companies, subsidies for often harmful industries, and a plethora of tax breaks. Growth is not the problem.
Interesting article and comments.
Question that someone with more knowledge may be able to answer; why are we measuring in goods produced when much of the workforce moved from making things to utilizing brainpower?
GDP includes services as well. As long as they are sold that is.
Very interesting. I've worked with the data mentioned before (as a student) and never really thought about such problems. Will do so from now on.
It would be interesting to see this methodology applied to other countries, since it paints a picture that the current economic understanding is wildly incorrect.