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Market Capitalization As A Percentage Of GDP

The Wall Street Journal – U.S. Growth Slows in 2nd Quarter [1]

U.S. economic growth pulled back further during the second quarter of the year as consumer spending slowed–a reading that suggests domestic fiscal worries may becoming a more significant drag. The nation’s gross domestic product–the value of all goods and services produced–grew at an annual rate of 1.5% between April and June, the Commerce Department said Friday. The reading is down from the upwardly revised 2.0% growth rate during the prior three months and a 4.1% rate in the fourth quarter of 2011. Economists surveyed by Dow Jones Newswires had expected 1.3% annualized growth during the second quarter…The economy has grown for 12 consecutive quarters, covering all but the first months of the president’s administration, but the gains have been very mild by historical standards and haven’t been enough to significantly push down the unemployment rate. Growth slowed from the prior quarter as the pace of consumer spending eased and state and local governments continued to cut.

Comment

Today the Department of Commerce released GDP statistics for the second quarter of 2012. Below we highlight various measures of GDP, the stock market’s capitalization, and money supply. A complete list of our market capitalization charts can be found here [2].

As of June 30, 2012, stock market capitalization was 103.73% of nominal GDP ($16.18 trillion divided by $15.60 trillion).

Click to enlarge:

 [3]

As of June 30, 2012 M2 as a percentage of stock market capitalization was 61.47% ($9.94 trillion divided by $16.18 trillion).

 [4]

As of June 30, 2012 the two-year change in the stock market’s capitalization increased by $3.65 trillion or 23.38% of the size of nominal GDP.

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Global markets lost $50 trillion in 2008

FINANCIAL markets across the world lost a whopping $50 trillion, including $9.6 trillion in the developing Asian market, says a report by the Asian Development Bank (ADB).  Developing Asian countries, which include countries such as China and India, have suffered more than any other emerging markets in the world due to the recent global economic downturn because the region’s markets have expanded much more rapidly, according to a new ADB study, ‘Global Financial Turmoil and Emerging Market Economies: Major Contagion and a Shocking Loss of Wealth’.

“This is by far the most serious crisis to hit the world economy since the Great Depression. While this crisis originated in the US and some European countries, by now no region or country is insulated. I am afraid things may get worse before they get better,” ADB president Haruhiko Kuroda said.

The value of financial assets to GDP rose to 370% of GDP in developing Asia in 2007 from 250% of GDP in 2003. In Latin America, the ratio only rose 30%, with the result that estimated losses on financial assets were a much lower $2.1 trillion, or 57% of GDP. “However, I remain confident that Asia will be one of the first regions to emerge from it, and it will emerge stronger than ever before,” Kuroda added.

Further, ADB said that a recovery can now only be envisaged for late 2009 or early 2010. “Most emerging market economies, including in developing Asia and Latin America, are at a crossroads, and the next 12 to 18 months will be very difficult,” the study stated.