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Map: Economic Might by U.S. Metro Area

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Map: Economic Might by U.S. Metro Area

Map: Economic Might by U.S. Metro Area

The U.S. economy is massive on a global scale, and much of the country’s economic capabilities can be traced back to the innovation, knowledge, and productivity that tends to be clustered in urban areas.

The fact is that 80% of Americans live in cities – and the 10 largest metro areas alone combine for a whopping 34% of the country’s total GDP.

The 10 Largest Metro Areas by GDP

Today’s map comes to us from HowMuch.net, and it highlights recent data from the U.S. Bureau of Economic Analysis that estimates the GDP for each U.S. metro area in 2016:

RankMetropolitan Area2016 GDP (Est.)Population
#1New York-Newark-Jersey City, NY-NJ-PA$1.43 trillion20.1 million
#2Los Angeles-Long Beach-Anaheim, CA$885 billion13.3 million
#3Chicago-Naperville-Elgin, IL-IN-WI$569 billion9.5 million
#4Dallas-Fort Worth-Arlington, TX$471 billion7.2 million
#5Washington-Arlington-Alexandria, DC-VA-MD-WV$449 billion6.1 million
#6Houston-The Woodlands-Sugar Land, TX$442 billion6.7 million
#7San Francisco-Oakland-Hayward, CA$406 billion4.7 million
#8Philadelphia-Camden-Wilmington, PA-NJ-DE-MD$381 billion6.1 million
#9Boston-Cambridge-Newton, MA-NH$371 billion4.8 million
#10Atlanta-Sandy Springs-Roswell, GA$320 billion5.8 million
Top 10 Metropolitan Areas$5.7 trillion84.3 million

Note: figures in chained 2009 dollars

Not surprisingly, New York City and its surrounding area is the breadwinner here with an annual economic output of $1.43 trillion – the largest for any city in the United States. Impressively, the GDP of the NYC metro area is even higher than those of most of the world’s countries, including Australia, Mexico, and Spain.

It’s also interesting that some metro areas punch above their weight in relation to their population figures. San Francisco is #7 on the list with a GDP of $406 billion, despite having the lowest population total of all of the top 10. Boston and D.C. can be classified similarly, each with a high economic output per capita.

Trending Up, Trending Down

While they can’t quite compete with cities like New York and Chicago in terms of GDP or population, there are actually 300+ other metro areas in the country.

Here’s a recent snapshot from the BEA of which cities are growing – and which are shrinking in terms of GDP:

U.S. metro areas

The BEA noted that real gross domestic product (GDP) increased in 267 out of 382 metropolitan areas in 2016.

The biggest increase was a tie between Lake Charles, LA and Bend-Redmond, OR, each which had GDP climb by 8.1% from the last year. The city that saw the biggest drop was Odessa, TX, which fell -13.3%.

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Chart of the Week

Visualizing Africa’s Free Trade Ambitions

The Gambia recently became the latest country to ratify the African Continental Free Trade Area (AfCFTA), helping the landmark agreement reach critical mass to move forward.

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africa free trade

Visualizing Africa’s Free Trade Ambitions

A united African continent working towards common goals would be a major force on the global economic stage.

To this end, nations in the region have been working towards an ambitious plan to create the world’s largest trade area. The Gambia recently became the latest country to ratify the African Continental Free Trade Area (AfCFTA), helping the agreement reach critical mass to move forward.

Today’s graphic helps put the region – and the status of AfCFTA – into perspective.

The Patchwork Problem

One key to unlocking the region’s economic potential is making it easier for Africa’s 55 countries to trade with one another.

Currently, Africa is a patchwork of regulations and tariffs, and trade between countries has suffered as a result. For example, only 10% of Nigeria’s annual trade activity is with other African countries. This is a surprising given the country’s dominant economic standing and location firmly in the center of the continent.

As a whole, Africa’s intra-continental trade level hovers at just around 20%, while nations in Europe and Asia are at 69% and 59%, respectively. Clearly, there is a lot of room for growth.

What is AfCFTA?

AfCFTA is the biggest free trade agreement since the establishment of the World Trade Organization.

The objective of the agreement is to create a single continental market for goods and services, with free movement of business people and investments.

Last year, 44 African leaders signed an agreement to ratify AfCFTA, with half that number needed to move the agreement forward. Earlier this week, The Gambia was the 22nd country to announce that its government has ratified the agreement, meeting the threshold to officially put the wheels in motion.

We have witnessed a historic moment for the African Continent. AfCFTA is now set to become operational within
the month, creating a single continental market for goods
and services.

– Mark-Anthony Johnson, CEO, JIC Holdings

The good news for the agreement is that many of Africa’s largest economies – including Egypt and South Africa – are already on board. There is, however, one significant holdout.

The Elephant in the Room

Even though the threshold for pushing AfCFTA forward has been reached, Nigeria’s lack of commitment is still a major blow to the strength and credibility of the agreement.

Nigeria’s situation is complicated. The country’s economic prospects are bright, and Lagos is on a trajectory to become the world’s largest city over the next few decades. On the other hand, there is fierce opposition from labor unions, and the country is home to largest concentration of people living in extreme poverty in the world.

[AfCFTA is] an extremely dangerous and radioactive
neo-liberal policy initiative.

– Ayuba Wabba, President of NLC, Nigeria’s largest labor union

While the majority of African nations appear to be on board with the plan to enact AfCFTA, it remains to be seen whether Nigeria comes along for the ride or decides to go it alone.

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Economy

How Macro Trends Shape the Market’s Future

From climate change to aging populations, macro trends are changing the future. Here’s how to use them to your advantage.

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It’s hard to say for certain what the future holds.

Without the luxury of a crystal ball, investors must find opportunities by analyzing the market. There’s just one problem: the 24/7 news cycle is enough to make anyone’s head spin.

Where should an investor focus their attention, when almost every new venture is forecast to be the next big thing?

The Powerful Influence of Macro Trends

Today’s infographic comes to us from U.S. Global Investors, and it highlights how analyzing macro trends can serve as a key investment tool.

U.S. Global Macro Trends

Two Main Investment Approaches

When selecting stocks, many investors fall into one of two camps:

1. Top-down Investing

  1. Analyze macroeconomic trends.
  2. Identify specific sectors and regions.
  3. Choose individual stocks based on company fundamentals.

Considering the aging Chinese population, a top-down investor may choose to invest in Chinese healthcare stocks.

2. Bottom-up Investing

  1. Complete in-depth company analyses.
  2. Select a stock that is outperforming others in its sector.

A bottom-up investor could analyze Home Depot and choose to invest if it had strong performance relative to Lowe’s.

These approaches can be used separately, or even combined together. Zooming out allows investors to identify the big picture opportunities. Then, a bottom-up approach can find the companies that best capitalize on each trend.

What is a Macro Trend?

A macro trend is a long-term directional shift that affects a large population, often on a global scale. For example, climate change is affecting industries in both positive and negative ways. While “green” industries have seen increased support, ski resorts are projected to have 50% shorter winter seasons by 2050.

There are a couple of main ways to identify macro trends:

  1. Government policy
    Government policies are a precursor to change, shaping macro trends and creating opportunities. For instance, Obama’s Recovery Act fueled growth in renewable energy with a $90 billion investment.
  2. Economic cycles
    The cyclical nature of the economy means that investors can also use history to identify macro trends. Consider fiscal and monetary policy, which is implemented in response to economic data:

    • Expanding economy
      The central bank raises rates and the government reduces fiscal stimulus. As a result, inflation is moderated.
      • Contracting economy
        The central bank lowers rates and the government increases fiscal stimulus. As a result, growth is stimulated.

Discovering Long-Term Value

Macro trends are a key tool for discovering long-term market opportunities. They are beneficial because they are:

  • Unbiased and data-driven
  • Not swayed by daily headlines
  • Tend to avoid riskier, niche industries
  • Can be diversified by sectors and regions

There are currently many macro trends at play. For example, Trump’s sweeping tax reform and deregulation boosted the U.S. economy, lifting GDP growth to a 13-year high of over 3% in 2018 Q3.

However, not everyone’s a winner. America’s reduced taxes have made Canada less competitive. It’s estimated that 4.9% of Canada’s GDP is at risk due to ripple effects from U.S. tax reform. What’s more, regulators worry that the bank deregulations might put the financial system at risk.

The proposals under consideration… weaken the buffers that are core to the resilience of our system.

— Lael Brainard, Member of the Board of Governors of the Federal Reserve

So, how do investors distill this wealth of information into a future of wealth?

Spotting the Next Wave

In today’s hyper-connected world, it’s easy to get lost in data overload. Thinking big picture allows investors to focus on trends that:

  • Have a long-term outlook
  • Affect a large population
  • Create a clearer vision of the future

Then, an investor can target the most promising regions and sectors. When used effectively, this approach enables investors to ride the next big wave that will shape markets.

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