Executive Summary
The United States Real and Nominal GDP per capita look better than ever, at $67,702 and $85,000, respectively. A more favorable environment for equity investors is expected in the mid-to-long-term horizon as a robust economy drives consumption thus boosting companies' earnings. We recommend staying invested in the S&P 500 as the US economy is the world's largest economy and 6th richest.
Why Investors Should Pay Attention To This Coincident Indicator?
While GDP is a leading economic indicator that measures the size of an economy, GDP per capita is a coincident indicator that represents how rich an economy is; that is, it measures how much the average citizen earns or contributes to the economy. The bigger the GDP per capita, the richer the people are on average. Generally, people living in countries with higher GDP per capita also have a higher standard of living. However, GDP per capita does not consider inequality, pollution, crime, and leisure time; the Gini coefficient and the Gross National Happiness (GNH) are the alternatives to measure some of the variables that the GDP per capita does not address such as equality, sustainable development, and work-life balance. By the end of this report, investors and traders should be able to make an educated long-term investment decision to improve their investment portfolio.
Key Points
In Q1 '24, Real GDP per capita increased by 0.3%, and 2.4% QoQ and YoY. The United States has the world’s sixth-largest Nominal GDP per capita; the leading five richest economies are Luxemburg, Ireland, Switzerland, Norway, and Singapore. The United States has a nominal GDP per capita of $85,000; advanced economies, the world, and emerging and developing economies have GDP per capita of $58,000, $14,000, and $7,000, respectively.
Investment Analysis
Looking at the trend of the US Real and Nominal GDP per capita, it is clear that no recession is occurring right now as GDP per capita usually lowers during such times. We recommend that investors stay invested in the S&P 500 because the United States citizens keep improving their standard of living which is a positive indicator of future companies’ earnings.
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