JANUARY 14, 2026
For more than a decade, the idea of American decline has hardened into a familiar refrain. Polarised politics, institutional strain and a relentless cycle of domestic crises have made it easy to assume that US power is ebbing, particularly when measured against a supposedly rising China and a cohort of wealthy democratic allies. Yet when the economic data are examined alongside comparable figures from the G7 and other advanced economies, the picture looks far less straightforward. The United States remains an outlier among rich nations: not free of problems, but unusually resilient in output, productivity and wealth creation. That resilience becomes most visible when America is viewed not in isolation, but relative to its peers.
In 1990, the United States accounted for roughly 26 percent of global gross domestic product. More than three decades later, and after repeated predictions of China’s inevitable overtaking, the US share remains virtually unchanged at about 25.9 percent, assuming Beijing’s own growth figures are accurate. That consistency matters because the global economy is far larger today than it was at the end of the Cold War, with US output alone reaching an estimated $30.62 trillion in 2025. The contrast with America’s closest allies is stark. When the Cold War ended, Britain, France, Italy, Japan and Canada together represented around 32 percent of global GDP. Today, that combined share has fallen to below 14 percent.
This relative contraction reflects weaker productivity growth, demographic pressure and prolonged underinvestment, particularly in Europe and Japan. At a more granular level, per-capita comparisons underline the divergence. Using datafrom the International Monetary Fund, the US Bureau of Economic Analysis and the Census Bureau, Mississippi, the poorest US state by GDP per capita, now outperforms four G7 countries on the same measure, while West Virginia with the second-lowest per capita GDP surpasses all six non-US G7 members. Since 2020, US GDP per capita has risen by roughly $20,000, a gain no other G7 economy has matched even over much longer periods.
Productivity has been a decisive factor in this widening gap. The United States has outpaced the rest of the G7 in productivity growth, both nationally and at state level, driven by technology adoption, capital depth and labour mobility. Europe’s struggle to keep up has been formally acknowledged at the highest levels. Mario Draghi’s 2024 report on European competitiveness, commissioned by the European Commission, warned that Europe is losing ground to the US and China in productivity, innovation and technological scale.
Without EU-wide industrial policy, deeper capital-market integration, large-scale joint investment in digital and green technologies, and a break from what Draghi called a “small-state mentality”, he argued the continent faces a “slow agony”: weaker growth, declining industrial capacity, falling global influence and a shrinking ability to fund social and strategic priorities over time.
The resilience of the US economy is also reflected in the accumulation of private wealth. According to Altrata’s World Ultra Wealth Report 2025, the United States now houses 38 percent of the world’s ultra-high-net-worth population, individuals worth more than $30 million, a larger share than the next ten countries combined. In absolute terms, 192,470 Americans control approximately $22.3 trillion in private wealth.
By comparison, wealth creation elsewhere has faced structural constraints. China’s ultra-wealth population has continued to grow, but at a slowing pace, as tighter state control and trade restrictions weigh on its technology sector. Europe crossed the symbolic threshold of 1,000 billionaires for the first time, yet its growth remains more cautious and institutional, with less tolerance for the volatility that characterizes US capitalism. That volatility, often criticized by regulators abroad, has proved central to American dynamism.
The same conditions that unsettle other economies, rapid technological change, market swings, aggressive capital reallocation, have allowed the US to adapt quickly and continue generating new entrants at the top end of the wealth spectrum. In 2024 alone, Altrata found that 10 percent of individuals globally worth between $1 billion and $2 billion dropped below that threshold, yet in the US new billionaires replaced them almost immediately.
None of this negates America’s challenges. Income inequality remains the highest in the G7, infrastructure investment has lagged, and healthcare costs remain structurally high. Public finances are under sustained strain: the US closed fiscal year 2025 with a federal deficit of roughly $1.8 trillion, only marginally lower than the previous year, adding to an already elevated debt burden. The economy also relies heavily on buoyant equity markets and continued investment in artificial intelligence, both of which remain vulnerable to shifts in sentiment and capital flows. But measured against its peers, the United States has not drifted into economic marginality.
Instead, it has pulled further ahead at a time when many allies have struggled to adapt. Strong allies once amplified American power. Today, the imbalance runs the other way. Predictions of American decline tend to focus inward, drawing conclusions from political dysfunction alone. A comparative view, grounded in output, productivity and wealth, suggests something more complex: a country whose internal problems coexist with an economic position that remains, by global standards, unusually strong.
Courtesy/Source: Economic Times / PTI
