economy of the United States is the largest national economy
in the world in both nominal value and by purchasing power parity.
- Throughout this article, the unqualified term "dollar" and
the $ symbol refer to the US
nominal gross domestic
(GDP) was estimated as $14.4 trillion
in 2008, which is about three times that
of the world's second largest economy, Japan
Its GDP by PPP
is almost twice
that of the second largest, China
The U.S. economy maintains a very high level of output
per person (GDP per
, $47,422 in 2008, ranked at around number ten in the
world). The U.S. economy has maintained a stable overall GDP growth
rate, a low unemployment
rate, and high
levels of research
and capital investment
funded by both
national and, because of decreasing saving
rates, increasingly by foreign investors. In 2008, consumer
spending made seventy-two percent of the economic activity in the
Since the 1970s, the United States economy has absorbed savings
from the rest of the world. The phenomenon is subject to discussion
among economists. Like other developed countries, the United States
faces retiring baby boomers
already begun withdrawing from their Social Security
however, the American population is young and growing when compared
to Europe or Japan. The 2008 estimates of the United States public debt by the
CIA Factbook and the International
Monetary Fund were 61% of GDP, about the same
as major European countries.
The United States has been one of the best-performing developed
countries, consistently outperforming European countries. The
American labor market has attracted immigrants from all over the
and has one of the world's highest migration
. Americans have the highest
income per hour worked
. The United States is ranked second,
down from first in 2008-2009 due to the economic crisis, in the
The economic history of the United States
roots in European
settlements in the 16th,
17th, and 18th centuries. The American colonies went from marginally
successful colonial economies to a small, independent farming
economy, which in 1776 became the United States of
In 230 years the United States grew to a
huge, integrated, industrialized economy that makes up over a
quarter of the world economy
. The main
causes were a large unified market, a supportive political-legal
system, vast areas of highly productive farmlands, vast natural
resources (especially timber, coal and oil), and an entrepreneurial
spirit and commitment to investing in material and human capital.
In addition, the U.S. was able to exploit these resources due to a
unique set of institutions designed to encourage exploration and
extraction. As a result, the U.S.'s GDP per capita converged on
that of the U.K., as well as other nations that it previously
trailed economically. The economy has maintained high wages,
attracting immigrants by the millions from all over the
After the Great Depression
For many years following the Great
of the 1930s, when the danger of recession
appeared most serious, government sought
to strengthen the economy by spending heavily itself or cutting
taxes so that consumers would spend more, and by fostering rapid
growth in the money supply, which also encouraged more spending. In
the 1970s, economic woes brought on by the costs of the Vietnam
conflict, major price increases, particularly for energy, created a
strong fear of inflation. As a result, government leaders came to
concentrate more on controlling inflation than on combating
recession by limiting spending.
Ideas about the best tools for stabilizing the economy changed
substantially between the 1960s and the 1990s. In the 1960s,
government had great faith in fiscal policy—manipulation of
government revenues to influence the economy. Since spending and
taxes are controlled by the president
and the U.S. Congress
, these elected
officials played a leading role in directing the economy. A period
of high inflation, high unemployment, and huge government deficits
weakened confidence in fiscal policy as a tool for regulating the
overall pace of economic activity. Instead, monetary policy assumed
Since the stagflation
of the 1970s, the
U.S. economy has been characterized by somewhat slower
The worst recession in recent decades, in terms of lost output,
occurred in the 1973-75 period of oil
, when GDP fell by 3.1 percent, followed by the 1981-82
recession, when GDP dropped by 2.9 percent.
Since the 1970s the US has sustained trade deficits with other
Output fell by 1.3 percent in the 1990-91 downturn, and a tiny 0.3
percent in the 2001 recession. The 2001 downturn lasted just eight
In recent years, the primary economic concerns have centered on:
high household debt ($14 trillion) including $2.5 trillion in
consumer debt, high national debt ($9 trillion), high corporate
debt ($9 trillion), high mortgage debt (over $10 trillion as of
2005 year-end), high unfunded Medicare liability ($30 trillion),
high unfunded Social Security liability ($12 trillion), high
(amount owed to foreign
lenders), high trade deficits
, and a
serious deterioration in the United States net international
(NIIP) (-24% of GDP). In 2006, the U.S
economy had its lowest saving rate since 1933. These issues have
raised concerns among economists
The U.S. economy maintains a relatively high GDP
per capita, with the caveat that it may be elevated by borrowing, a
low to moderate GDP growth rate, and a low unemployment rate,
making it attractive to immigrant
The United States entered 2008 during a housing market
, a subprime
and a declining dollar value. On December 1,
2008, the NBER
declared that the United States entered a recession
in December 2007, citing
employment and production figures as well as the third quarter
decline in GDP.
China, holding $801.5 billion in Treasury bonds, is the largest foreign
financier of the record U.S. public
China owns an estimated $1.6 trillion of U.S.
United States wealth compared to the
rest of the world in the year 2000
Year-on-year change in total net worth
of US households and nonprofit organizations 1946-2007, unadjusted
for inflation or population change.
A central feature of the U.S. economy is the economic freedom
afforded to the private sector by allowing the private sector to
make the majority of economic decisions in determining the
direction and scale of what the U.S. economy produces. This is
enhanced by relatively low levels of regulation and government
involvement, as well as a court system that generally protects
property rights and enforces contracts.
The United States is rich in mineral resources and fertile farm
soil, and it is fortunate to have a moderate climate. It also has extensive
coastlines on both the Atlantic and Pacific Oceans, as well as on the Gulf of Mexico. Rivers flow from far within the continent,
and the Great Lakes—five large, inland lakes along the U.S. border with
Canada—provide additional shipping access.
extensive waterways have helped shape the country's economic growth
over the years and helped bind America's 50 individual states
together in a single economic unit.
The number of workers and, more importantly, their productivity
help determine the health of the U.S. economy. Throughout its
history, the United States has experienced steady growth in the
labor force, a phenomenon that is both cause and effect of almost
constant economic expansion. Until shortly after World War I
, most workers were immigrants from
Europe, their immediate descendants, or African Americans
who were mostly slaves
taken from Africa
, or slave descendants.
Beginning in the early 20th century, many Latin Americans
immigrated; followed by large
numbers of Asians
of nation-origin based immigration quotas. The promise of high
wages brings many highly skilled workers from around the world to
the United States.
Labor mobility has also been important to the capacity of the
American economy to adapt to changing conditions. When immigrants
flooded labor markets on the East Coast, many workers moved inland,
often to farmland waiting to be tilled. Similarly, economic
opportunities in industrial, northern cities attracted black
Americans from southern
in the first half of the 20th century.
In the United States, the corporation
has emerged as an association of owners, known as stockholders, who
form a business enterprise governed by a complex set of rules and
customs. Brought on by the process of mass production
, corporations, such as
, have been
instrumental in shaping the United States. Through the stock market
, American banks and investors have
grown their economy by investing and withdrawing capital from
profitable corporations. Today in the era of globalization
, American investors and
corporations have influence all over the world. The American
government is also included among major the investors in the
American economy. Government investments have been directed
towards public works of scale (such as from the Hoover Dam), military-industrial contracts, and the financial
While consumers and producers make most decisions that mold the
economy, government has a powerful effect on the U.S. economy in at
least four areas, as the government uses a capitalist system.
Strong government regulation in the U.S. economy started in the
early 1900s with the rise of the Progressive Movement
; prior to this the
government promoted economic growth through protective tariffs and
subsidies to industry, built infrastructure, and established
banking policies, including the gold standard, to encourage savings
and investment in productive enterprises. On June 26, 2009, Jeff
Immelt, the CEO of General Electric, called for the United States
to increase its manufacturing base employment to 20% of the
workforce, commenting that the U.S. has outsourced too much in some
areas and can no longer rely on the financial sector and consumer
spending to drive demand.
In 2007, Americans stood second only to Canada in the percentage of
35 to 64 year olds holding at least two-year degrees. Among 25 to
34 year olds, the country stands tenth.
United States received 4.31 immigrants per 1000
in 2009 - 16th highest rate in the world.
Nearly 8 million immigrants came to the United States from 2000 to
2005 – more than in any other five-year period in the nation's
history. The analysis shows that 31% of adult immigrants have not
completed high school. A third lack health insurance.
In May 2009, the unemployment rate was 9.4%. A broader measure of
unemployment (taking into account marginally attached workers,
those employed part time for economic reasons, and discouraged workers
) was 15.9%.
Female unemployment continued to be significantly lower than male
unemployment (7.5% vs. 9.8%). The unemployment among
African-Americans continues to be much higher than white
unemployment (at 14.9% vs. 8.6%). The youth unemployment rate was
18.5% in July 2009, the highest July rate since 1948. 34.5% of
young African American men are unemployed.
Income and wealth
According to the United
States Census Bureau
, the pretax median household income
in 2007 was
$50,233. The median ranged from $68,080 in Maryland to $36,338 in Mississippi.
In 2007, the median real annual household income rose 1.3% to
$50,233, according to the Census Bureau
. The real median
earnings of men who worked full time, year-round climbed between
2006 and 2007, from $43,460 to $45,113. For women, the
corresponding increase was from $33,437 to $35,102. The median
income per household member (including all working and non-working
members above the age of 14) was $26,036 in 2006.
The recently released US Income Mobility Study showed economic
growth resulted in rising incomes for most taxpayers over the
period from 1996 to 2005. Median incomes of all taxpayers increased
by 24 percent after adjusting for inflation. The real incomes of
two-thirds of all taxpayers increased over this period. Income
mobility of individuals was considerable in the U.S. economy during
the 1996 through 2005 period with roughly half of taxpayers who
began in the bottom quintile moving up to a higher income group
within 10 years. In addition, the median incomes of those initially
in the lower income groups increased more than the median incomes
of those initially in the higher income groups.
States is the largest energy consumer in terms of total use,
using 100 quadrillion BTUs (105
exajoules, or 29000 TWh) in 2005.
The U.S. ranks seventh in
energy consumption per-capita after Canada and a number of small
countries. The majority of this energy is derived from fossil fuels
: in 2005, it was estimated that 40%
of the nation's energy came from petroleum
, 23% from coal
23% from natural gas
. Nuclear power
supplied 8.4% and renewable energy
supplied 6.8%, which was
mainly from hydroelectric dams although other renewables are
included such as geothermal and solar energy.
American dependence on oil import
grew from 24% in
1970 to 65% by the end of 2004. At the current rate of unchecked
import growth, the US would be 70% to 75% reliant on foreign oil
by the middle of the next decade.
has the highest consumption rates
accounting for approximately 68.9% of the oil used in the United
States in 2006,
and 55% of oil use worldwide as documented in the Hirsch report.
Agriculture is a major industry in the United States and the
country is a net exporter of food.
Products include wheat
, other grains
, dairy products
; forest products
USA is the leading manufacturer in the world with a 2007 industrial
output of US$2,696,880 millions.Main industries are petroleum,
steel, motor vehicles, aerospace, telecommunications, chemicals,
electronics, food processing, consumer goods, lumber, mining.
Stock Exchange is a stock exchange
located at 11 Wall
Street in lower Manhattan, New York
is the largest stock exchange in the world by United States dollar value
of its listed companies'
. As of October 2008,
the combined capitalization
all domestic NYSE listed companies was US$
NASDAQ, is an American stock
It is the largest electronic
screen-based equity securities
trading market in the United States.
With approximately 3,800 companies and corporations, it has more
trading volume per hour than any other stock exchange in the
The United States is the most significant nation in the world when
it comes to international trade. For decades, it has led the world
in imports while simultaneously remaining one of the top three
exporters of the world.
As the major epicenter of world trade, the United States enjoys
leverage that many other nations do not. For one, since it is the
world's leading consumer, it is the number one customer of
companies all around the world. Many businesses compete for a share
of the U.S market. In addition, the United States occasionally uses
its economic leverage to impose economic sanctions in different
regions of the world. The U.S. is the top export market for almost
60 trading nations worldwide.
Since it is the world's leading importer, there are many U.S.
dollars in circulation all around the planet. The historically
stable American economy and effective monetary policy led to faith
in the U.S. dollar. 2009 has seen government policy that is
weakening the US dollar. Large foreign economies own huge dollar
reserves (especially as the US is more in debt) so there is a fear
that they will move away from the dollar.
In 2008, the total U.S. trade
was $695.9 billion. The trade deficit with China was $266.3 billion, a new record and up from $304
million in 1983.
In order to fund the national debt
(also known as public debt), the United States relies on selling
U.S. treasury bonds
to people both
inside and outside the country, and in recent times a growing
percent of buyers are international.
Economic predictions and forecasting
Predictions about the direction of the United States economy in the
short term and long term are crucial factors in determining federal
government policies, business decisions, and Federal Reserve
decisions. Several institutions make economic predictions,
including: Global Insight
, and the UCLA Anderson
. Various state agencies, including the California
Department of Finance, also make predictions.
Currency and central bank
United States dollar is the
unit of currency of the United States.
United States historical inflation
The U.S. dollar is the currency most used
in international transactions. Several countries use it as their official currency
, and in many
others it is the de facto
The federal government attempts to use both monetary policy
(control of the money supply
through mechanisms such as changes in interest rates) and fiscal policy
(taxes and spending) to maintain
, high economic growth, and
. A relatively
independent central bank
, known as the
, was formed in 1913
to provide a stable currency
and monetary policy
. The U.S. dollar
has been regarded as one of the most stable
currencies in the world and many nations back their own currency
with U.S. dollar reserves.
During the last few years, the U.S. dollar has gradually
depreciated in value and its reserve currency status is no longer
as high as previously. With increased US debt, policy that's
weakening the dollar and the EU signing the Lisbon Treaty, the
dollar is less of a global currency standard.
The dollar used gold standard
from 1785 until
1975, when it became a fiat
The U.S. federal
regulates private enterprise in numerous ways.
Regulation falls into two general categories.
Some efforts seek, either directly or indirectly, to control
prices. Traditionally, the government has sought to prevent
such as electric utilities from
raising prices beyond the level that would ensure them extremely
large profits. At times, the government has extended economic
control to other kinds of industries as well. In the years
following the Great Depression, it devised a complex system to
stabilize prices for agricultural goods, which tend to fluctuate
wildly in response to rapidly changing supply and demand. A number
of other industries—trucking and, later, airlines—successfully
sought regulation themselves to limit what they considered as
harmful price cutting, a process called regulatory capture
Another form of economic regulation, antitrust law
, seeks to strengthen market
forces so that direct regulation is unnecessary. The
government—and, sometimes, private parties—have used antitrust law
to prohibit practices or mergers that would unduly limit
Bank regulation in
the United States
is highly fragmented compared to other
countries where most
countries have only one bank regulator. In the U.S., banking is
regulated at both the federal and state level. The U.S also has one
of the most highly regulated banking environments in the world;
however, many of the regulations are not safety and soundness
related, but are instead focused on privacy, disclosure, fraud
prevention, anti-money laundering, anti-terrorism, anti-usury
lending, and promoting lending to lower-income
Since the 1970s, government has also exercised control over private
companies to achieve social goals, such as improving the public's
health and safety or maintaining a healthy environment. For
example, the Occupational
Safety and Health Administration
provides and enforces
standards for workplace safety, and the United States
Environmental Protection Agency
provides standards and
regulations to maintain air, water, and land resources. The U.S.
Food and Drug
regulates what drugs may reach the market, and
also provides standards of disclosure for food products.
American attitudes about regulation changed minimally during the
final three decades of the 20th century. Beginning in the 1970s,
policy makers grew increasingly convinced that economic regulation
protected companies at the expense of consumers in industries such
as airlines and trucking. At the same time, technological changes
spawned new competitors in some industries, such as
telecommunications, that once were considered natural monopolies.
Both developments led to a succession of laws easing
While leaders of America's two most influential political parties
generally favored economic deregulation
during the 1970s, 1980s, and 1990s, there was less agreement
concerning regulations designed to achieve social goals. Social
regulation had assumed growing importance in the years following
the Depression and World War II, and again in the 1960s and 1970s.
During the 1980s, the government relaxed labor, consumer and
environmental rules based on the idea that such regulation
interfered with free enterprise
increased the costs of doing business, and thus contributed to
inflation. The response to such changes is mixed; many Americans
continued to voice concerns about specific events or trends,
prompting the government to issue new regulations in some areas,
including environmental protection.
Where legislative channels have been unresponsive, some citizens
have turned to the courts to address social issues more quickly.
For instance, in the 1990s, individuals, and eventually the
government itself, sued tobacco companies over the health risks of
cigarette smoking. The 1998 Tobacco Master Settlement
provided states with long-term payments to cover
medical costs to treat smoking-related illnesses.
Taxation in the United
is a complex system which may involve payment to at
least four different levels of government and many methods of
taxation. United States taxation includes local government, possibly including one or
more of municipal, township,
district and county governments.
also includes regional entities such as school
and utility, and transit districts
well as including state
The National Bureau
of Economic Research
has concluded that the combined federal,
state, and local government average marginal tax rate
for most workers to be
about 40% of income. The Tax
concluded that government at all levels will collect
30.8% of the nation's income for 2008. Tax
, the day by which tax
are due, is usually April
The United States public sector spending amounts to about a third
of the GDP.
Each level of government provides many direct services. The federal
government, for example, is responsible for national defense, backs
research that often leads to the development of new products,
conducts space exploration, and runs numerous programs designed to
help workers develop workplace skills and find jobs (including
higher education). Government spending has a significant effect on
local and regional economies—and even on the overall pace of
meanwhile, are responsible for the construction and maintenance of
most highways. State, county, or city governments play the leading
role in financing and operating public schools. Local governments
are primarily responsible for police and fire protection.
Overall, federal, state, and local spending accounted for almost
28% of gross domestic product in 1998.
As of January 20, 2009, the total U.S. federal debt was $10.627
trillion (an increase of 85.5 percent over the previous eight
years).The borrowing cap debt ceiling as of 2005 stood at $8.18
trillion. In March 2006, Congress raised that ceiling an additional
$0.79 trillion to $8.97 trillion, which is approximately 68% of
GDP. Congress has used this method to deal with an encroaching debt
ceiling in previous years, as the federal borrowing limit was
raised in 2002 and 2003. As of October 4, 2008, the "The Emergency Economic
Stabilization Act of 2008
" raised the current debt ceiling to
US$ 11.3 trillion.
While the U.S. national debt is the world's largest in absolute
size, another measure is its size relative to the nation's GDP. As
of January 20, 2009, the debt was 73 percent of GDP, a level not
seen in the U.S. since 1955 when the country was recovering from
World War II. This debt, as a percent of GDP, is still less than
the debt of Japan
equivalent to those of a few western European nations. The US debt
as a percent of GDP is more than the debt of European Union as a
- Can the World Stop the Slide, TIME,
February 4, 2008, page 27.
- US spends its way to 28 Eiffel towers: made out of
pure gold, Times Online
- (all estimates 2007 data unless noted)
- Click the link "Rankings" to access the entire list.
- Bivens, L. Josh (December 14, 2004). Debt and the dollar Economic Policy
Institute. Retrieved on July 8, 2007.
- Associated Press (January 30, 2006). US savings rate
hits lowest level since 1933MSNBC. Retrieved on May 6,
- Cauchon, Dennis and John Waggoner (October 3, 2004).The Looming
National Benefit Crisis. USA Today
- " Washington learns to treat China with care".
CNNMoney.com. July 29, 2009.
- " China must keep buying US Treasuries for
now-paper". Reuters. August 19, 2009.
- U.S. Department of state:How the U.S. Economy
Works Retrieved December 1, 2008
- Bailey, David and Soyoung Kim (June 26, 2009). GE's Immelt says U.S. economy needs industrial
renewal.UK Guardian.. Retrieved on June 28, 2009.
- " Immigration surge called 'highest ever'".
Washington Times. December 12, 2005.
- " Study: Immigration grows, reaching record
numbers". USATODAY.com. December 12, 2005.
- " Employment and Unemployment Among Youth
Summary". United States Department of Labor.
- " Blacks hit hard by economy's punch". The
Washington Post. November 24, 2009.
- Census Bureau: Two-Year-Average Median Household Income by
State: 2004 to 2007
- World Per Capita Total Primary Energy
Consumption,1980-2005 (MS Excel format)
- World Resources Institute " Energy Consumption: Consumption per capita"
(2001). Nations with higher per-capita consumption are: Qatar,
Iceland, United Arab Emirates, Bahrain, Luxembourg and Canada.
Except for Canada, these are small countries with a prominent
energy-intensive industry such as oil refining or steelmaking.
- US Dept. of Energy, " Annual Energy Report" (July 2006), Energy Flow
- " The U.S. Trade Deficit".
- " Beijing's Propaganda Goes Global". Gordon G.
Chang, Forbes. May 6,
- The Implementation of Monetary Policy - The Federal
Reserve in the International Sphere
- Benjamin J. Cohen, The Future of Money, Princeton
University Press, 2006, ISBN 0691116660; cf. "the dollar
is the de facto currency in Cambodia", Charles Agar, Frommer's
Vietnam, 2006, ISBN 0471798169, p. 17
- National Debt Burden : Full History