Mississippi, the poorest state in the United States, is close to surpassing Europe’s largest economy Germany’s GDP per capita. Euronews Business compares US states with European countries.
The poorest US state’s Gross Domestic Product (GDP) per capita is higher than that of Europe’s top five economies, except for Germany. However, Mississippi competes closely with Germany, with a difference of just €1,500.Â
GDP per capita, adjusted for Purchasing Power Parity (PPP), in the US also surpasses that of all EU countries, except for Luxembourg and Ireland, which are outliers.
How do GDP per capita figures, both in current prices and adjusted for PPP, in the US’s richest and poorest states compare with European countries, specifically the EU and the UK?Â
We derived the 2024 country figures from the IMF’s Global Outlook report, reflecting data as of October. We made the calculation for US states using seasonally adjusted datasets from the US Bureau of Economic Analysis (BEA) for Q3 2024, and population estimates from the US Census Bureau as of July.
In Q3 2024, GDP per capita in the US ranged from €49,780 ($53,872) in Mississippi to €246,523 ($266,787) in the District of Columbia. At the lower end, West Virginia (€56,554), Arkansas (€56,917), Alabama (€58,061), and South Carolina (€59,375) followed Mississippi.Â
Among the top five, New York (€107,485), Massachusetts (€101,666), Washington (€99,844), and California (€96,836) followed the District of Columbia. The figures are shown in US dollars in the chart.
For the EU in 2024, GDP per capita ranged from €15,773 in Bulgaria to €125,043 in Luxembourg. The EU average stood at €40,060, while the US average was €80,023 ($86,601).
Among Europe’s top five economies, Germany recorded the highest GDP per capita at €51,304, followed by the UK at €48,441 and France at €44,365. Italy stood at €37,227, while Spain recorded €33,070.Â
The top five European economies are defined by their total economic size, not by GDP per capita.
Mississippi gets close to surpassing Germany’s GDP per capita
These figures show that GDP per capita in Mississippi, the poorest US state, is higher than in Europe’s top economies, except for Germany, where it falls short by €1,524. Germany ranked as the third-largest economy in the world in 2024, contributing 24.3% to the EU’s total GDP.
Mississippi’s GDP per capita is significantly higher than the other four top European economies, exceeding Spain by €16,710, Italy by €12,553, France by €5,415, and the UK by €1,339.
The second poorest state, West Virginia, had a noticeably higher GDP per capita than all five European countries, surpassing Germany by €5,270
How do rankings change with PPP adjustments?
Purchasing power parities, (PPPs), are indicators of price level differences across countries. “PPPs tell us how many currency units a given quantity of goods and services costs in different countries”, Eurostat explains.Â
When GDP per capita is adjusted for PPP, both the figures and rankings change significantly. According to the IMF, which converts these figures into US dollars, GDP per capita in the US is $86,601, compared with the EU average of $62,660.
GDP per capita in PPP terms is higher in the US than in all EU countries and the UK, except for Luxembourg and Ireland, which are considered outliers. However, the gap between the US and European countries narrows significantly under PPP adjustments. For instance, Germany’s GDP per capita, which is $55,521 in current prices, rises to $70,930 when adjusted for PPP.
ADVERTISEMENTThis suggests that the rankings between US states and European countries also shift accordingly. For a fair comparison, regional price parities (RPP) for US states should be taken into account. The RPP covers all consumption goods and services including housing rents.Â
According to BEA, in 2023, the RPP in Mississippi was 87.3, compared to the US average of 100, indicating that the cost of living in Mississippi was 12.7% lower than the national average.Â
Applying this rate to Q3 2024, the GDP per capita in PPP could be approximately $60,714, though variations in definitions might affect the calculation. In this scenario, Mississippi’s GDP per capita in PPP would be likely to fall slightly below the EU average but remain higher than Spain’s.
Why are Luxembourg and Ireland considered outliers?
According to Eurostat, Luxembourg’s high GDP is “partly explained by the fact that a large number of foreign residents are employed in the country and thus contribute to its GDP, while they are not part of Luxembourg’s resident population.”
ADVERTISEMENTDr Tom McDonnell, co-director of the Nevin Economic Research Institute, told Euronews Business that Ireland’s GDP is distorted due to the tax planning activities of US multinationals.
GDP represents the monetary value of all final goods and services produced within a country over a specific period. It serves as a key indicator to measure the size and growth of a nation’s economy.
GDP per capita is commonly used to compare countries, while GDP per capita adjusted for PPP offers a more fair basis for comparison. Disposable income, along with average and median salaries, is also used for a fair comparison.
Source: Euro News
