The economy on the whole isn’t doing very well. We’ve seen consistent growth, but it’s been very small. Unemployment has dropped, but that’s largely due to increased numbers of workers dropping out of the workforce altogether. Consumer confidence isn’t very high either, but it’s not all bad news. The shadow economy continues to boom. That is the part of the economy that isn’t reported for tax purposes.
The shadow economy is estimated to be very small in the U.S. when compared with other countries. As you can see in the infographic, in the U.S., the figure only comes to 9.1% of GDP. Relative to Brazil, that’s a drop in the bucket. Their shadow economy totals 39% of GDP. That’s not the highest though. Russia comes in at 44%. Informal economies can cause devastating effects. The largest of these is on the governments themselves. The loss in potential tax revenue is valued in the billions and even hundreds of billions per country. It contributes to the large deficits that many of these nations find themselves in; although, taxing their informal economies wouldn’t be enough to fix the deficit outright.
The shadow economy has been a persistent part of culture since the birth of taxes, and it doesn’t show any signs of slowing down. Even in the darkest of economic days, it always finds a way to thrive.

This infographic was designed and created by Wallace & Associates APC – CPA, a certified Los Angeles taxation and accounting agency.