THE BUZZ, BUZZ ON ALL THINGS GROSS

We don't know anyone that likes to hang around flies. That is probably because flies are nasty, gross little critters that do disgusting things, so we won't talk about them anymore this morning to avoid potential issues with your breakfast. Instead, we point out that beyond flies, many other things in life can be gross, like for instance, the gross domestic product at times (didn't see that one coming, did you?). Many may wonder exactly why a community bank needs to care much about what is going on in another country, when there is plenty to do just down the street, so today we tie it all together. For background, we pulled some really interesting data together and analyzed gross domestic product (GDP) from a global viewpoint. The U.S. emerges as the top country by itself at 23.4% of global GDP, but slips to 2nd place when the European Union (EU) is lumped in (at 25.9%). Rounding out the rest of the top 5 we have China (9.3%), Japan (8.7%) and Germany (5.2%). Sure, Germany is inside the EU, but it is important to know how the country stacks up standing by itself, since its coffers seem to be supporting much of the restructuring going on in that region. For additional fun, consider that the U.S. produces more economic growth than China, Japan and German combined. That is pretty good, so as we can see, the world is happy when they see the U.S. growing and the U.S. is happy when we see the EU growing (as they are a key group of our trading partners). Looking at the impact of various U.S. states, we find CA at the top with 13.2% of the U.S. GDP. CA is followed in order by TX (8.2%); NY (7.9%); FL (5.1%) and IL (4.4%). All told, this group of U.S. states accounts for 38.8% of total U.S. economic activity and the top 10 (which includes PA, NJ, OH, VA and NC) pushes things to 55%. On an individual basis, if CA were a country it would fall into the #9 slot, just behind Italy and just ahead of India. Meanwhile, our top 5 states equal the GDP of China. Our top 2 states are slightly smaller than Italy and Spain, just so you have that perspective as well (while TX and NY combined are about the same as the U.K.). In the EU, it takes only the top 5 countries to reach 71% of total GDP for the region, while in the U.S. to reach that level would take about 18 states. Greece and Portugal are about the GDP of PA (at #6 for the U.S.), so imagine the impact to our country if a crisis so significant were to occur like what we are witnessing overseas. Then, toss Spain and Italy into the mix and you have about the same impact as our top 3 U.S. states going bust all at once. When you think about it that way, it is much clearer as to why Fed Chair Bernanke and others wring their hands in worry about the potential spillover effect. As for some other notables we thought you might find interesting, as will community banking, the GDP of the bottom 5 states (VT, ND, MT, WY and SD) adds up to about the same as the state of AL, or somewhere between the countries of Romania and Hungary. Meanwhile, the bottom 5 states are about 11x smaller than the largest state of CA. Finally, the top 5 countries in the world account for 51% of global GDP; but the EU, U.S., China and Japan are 67% of the world's GDP. We hope this provides insight as to why all the buzzing around problems in Europe could have a profound impact on community bankers only doing business in the U.S. If nothing happens and the issues overseas are worked out, at least you enjoyed the buzz around the gross data just provided.