While it might raise eyebrows, the economic output per person in the poorest state in the United States rivals that of Europe’s leading economies. Intriguingly, Mississippi, often cited as the US’s least affluent state, stands shoulder to shoulder with economic powerhouse Germany in terms of Gross Domestic Product (GDP) per capita, with a surprisingly narrow gap of just around €1,500 separating them.
Furthermore, when considering Purchasing Power Parity (PPP), which adjusts for differences in the cost of living, the US generally outpaces all European Union nations, with the exceptions of Luxembourg and Ireland, often considered economic outliers due to specific factors.
But how exactly do the richest and poorest US states compare to European countries, particularly within the EU and the United Kingdom, in terms of GDP per capita, both at current prices and when adjusted for PPP?
Data sourced from the International Monetary Fund’s (IMF) Global Outlook report (October 2024) provides country-level figures. For US states, calculations are based on seasonally adjusted datasets from the US Bureau of Economic Analysis (BEA) for Q3 2024, alongside population estimates from the US Census Bureau (July 2024).
In the third quarter of 2024, the spectrum of GDP per capita across the US states was broad, ranging from €49,780 ($53,872) in Mississippi to a remarkable €246,523 ($266,787) in the District of Columbia. Trailing Mississippi at the lower end were West Virginia (€56,554), Arkansas (€56,917), Alabama (€58,061), and South Carolina (€59,375).
Conversely, after the District of Columbia, the highest GDP per capita figures were observed in New York (€107,485), Massachusetts (€101,666), Washington (€99,844), and California (€96,836).
Across the European Union in 2024, GDP per capita varied significantly, from €15,773 in Bulgaria to €125,043 in Luxembourg. The average GDP per capita for the EU was €40,060, while the US average reached €80,023 ($86,601).
Among Europe’s top five largest economies – defined by overall economic size rather than per capita GDP – Germany led with a GDP per capita of €51,304. The UK followed at €48,441, France at €44,365, Italy at €37,227, and Spain at €33,070.
Mississippi’s GDP per Capita Nears Germany’s Level
These comparisons reveal a striking detail: Mississippi, despite being the poorest US state, boasts a GDP per capita that surpasses all of Europe’s major economies except for Germany. The difference between Mississippi and Germany’s GDP per capita is a relatively small €1,524. It’s noteworthy that Germany was the world’s third-largest economy in 2024 and contributed nearly a quarter (24.3%) of the EU’s total GDP.
Mississippi’s economic output per person significantly exceeds that of the other top European economies, surpassing Spain by €16,710, Italy by €12,553, France by €5,415, and the UK by €1,339. Even West Virginia, the second-poorest US state, demonstrates a considerably higher GDP per capita than all five of these European nations, exceeding Germany by €5,270.
The Impact of Purchasing Power Parity (PPP) Adjustments
Purchasing power parities (PPPs) are crucial for understanding international economic comparisons as they reflect differences in price levels between countries. As Eurostat explains, PPPs indicate “how many currency units a given quantity of goods and services costs in different countries.”
When GDP per capita is adjusted for PPP, the figures and relative rankings undergo notable shifts. According to the IMF, in PPP terms, the US GDP per capita is $86,601, while the EU average is $62,660.
Euronews Logo: Source for European economic data in comparison with US states GDP per capita.
In PPP-adjusted terms, the US maintains a higher GDP per capita than every EU member state and the UK, except for Luxembourg and Ireland. However, the economic gap between the US and European countries is considerably reduced after PPP adjustments. For instance, Germany’s GDP per capita, which is $55,521 at current prices, increases to $70,930 when adjusted for PPP.
This shift in figures also affects the rankings between US states and European countries. For a more accurate comparison within the US, Regional Price Parities (RPP) should be considered. RPP accounts for variations in the cost of consumer goods and services, including housing rents, across different US states.
Data from the BEA indicates that in 2023, Mississippi’s RPP was 87.3, against a national average of 100. This suggests that the cost of living in Mississippi was 12.7% lower than the US average. Applying this RPP to the Q3 2024 GDP per capita figure results in an approximate PPP-adjusted GDP per capita of $60,714 for Mississippi. While this calculation is subject to variations in definitions and methodology, it suggests that Mississippi’s PPP-adjusted GDP per capita would likely be slightly below the EU average but still higher than Spain’s.
Why Luxembourg and Ireland Are Considered Economic Outliers
Eurostat attributes Luxembourg’s exceptionally high GDP partly to the significant number of foreign residents employed in the country. These workers contribute to Luxembourg’s GDP but are not counted as part of its resident population, inflating the per capita figure.
Dr. Tom McDonnell, co-director of the Nevin Economic Research Institute, explained to Euronews Business that Ireland’s GDP is skewed upwards due to the tax optimization strategies employed by US multinational corporations.
In essence, GDP represents the total monetary value of all final goods and services produced within a country’s borders during a specific period. It serves as a fundamental metric for gauging the size and growth of a nation’s economy. GDP per capita provides a valuable tool for comparing economic output across countries, and PPP-adjusted GDP per capita offers a more refined and equitable basis for such comparisons. Furthermore, metrics like disposable income, alongside average and median salaries, contribute to a more comprehensive and nuanced understanding of economic well-being when making international comparisons.
