Markewatch runs this article today saying that new numbers released by the IMF indicate that China has taken over as the larget economy in the world just ahead of the US. Looking at the IMF projections in their report, it appears they expect this to continue in the future as well.
The MarketWatch article has this to say:
"Yes, all statistics are open to various quibbles. It is perfectly possible China’s latest numbers overstate output — or understate them. That may also be true of U.S. GDP figures. But the IMF data are the best we have."
We just recently ran this blog post here that suggests the Chinese numbers probably are overstated. And this one about China rapidly cutting interest rates because leaders there fear the economy is faltering.
But it is also true that the US numbers may be overstated also since they contain a lot of Fed QE stimulus. People like John Williams of Shadowstats.com claim they are heavily overstated.
I don't know what the true numbers really are, but it is likely that both are overstated some and reflect a lot of created QE stimulus money. If we ever get back to a real economy that can stand on its own feet without artificially low interest rates and money stimulus, perhaps we can find out. On the other hand, we have no idea if the global economy can actually do that at this point. That is what everyone is waiting to see. The IMF and BIS have repeatedly warned that it could be rough when we try it. 2015 should be interesting.
Added note: This can't be a sign that things are great. Sears closing 235 stores.
And here is another article worth reading on this. This article points out that the Chinese economy is burdened with a lot of questionable "GDP" fueled by debt that may not be possible to pay off. But it does not go on to point out that if China gets into trouble there could be a ripple impact on the world and the US. With Russia in serious trouble now (Putin calling for bail out of Russian banks today) it is a time to be watchful. A problem anywhere can lead to a problem everywhere.
One last update: MarketWatch puts out this article claiming the US is still #1 depending on how you look at it. My question is: What happens when everyone stops artificially stumulating things? Or will they ever really be able to stop now? I don't think anyone knows yet.