With over 75,000 data points on how people spend and earn their money around the globe, investors can learn a lot in this year's edition of Prices and Earnings. Read on for our three big takeaways and explore all the data yourself here.
Los Angeles and Miami, second and fourth on our list, rank near the top in terms of purchasing power. In fact, most of the North American cities represented have fared well this year, with Toronto finishing seventh, New York 10th, Montreal 11th and Chicago 13th. When adjusting for annual working hours, Los Angeles comes out on top globally, with a purchasing power 23.9% higher than that of New York.
We believe that these high US rankings stem from a strong domestic economy that is near full employment in the cities that we reviewed. The productivity gains are passed on to workers who wind up having more purchasing power than their global peers.
In local currency terms, reported wage growth in our sample of 15 professions has been most evident in the emerging markets. This also holds true after accounting for (the unweighted) average of inflation in each region. Comparing our findings with previous editions of Prices and Earnings, we see a similar effect. All in all, this supports the economic theory of convergence, which states that regions (or in our case cities) with lower per capita incomes will tend to grow faster than richer economies. Thanks to strong economic fundamentals, this effect is playing out in all emerging market regions, from South America to Asia.
Nothing new to see here. Zurich is still the most expensive city in our ranking (including and excluding rent both), and Luxembourg tops the list for purchasing power (gross hourly pay). In fact, with the notable exception of Toronto and Frankfurt, most cities in our top 10 remain largely unchanged and continue to enjoy the best buying power overall.