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Economy of USA

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Economy of USA

  1. 1. Economy of the United States (From Wikipedia, the free encyclopedia) Economy of the United States of America New York City, financial center of the United States Rank 1st (nominal) / 1st (PPP) Currency US$ (USD) Fiscal year October 1 – September 30 Statistics GDP $15.776 trillion (September 2012)[1][2] GDP growth 2.3% (September 2011–September 2012) [1][2] GDP per capita $48,450 (2011)[3][4] (14th, nominal; 6th, PPP) GDP by sector Agriculture: 1.2%, industry: 19.2%, services: 79.6% (2011 est.) Inflation (CPI) 1.7% (September 2011–September 2012) [5] [6]
  2. 2. Population 15.1% (2010)[7]below povertylineGini coefficient 0.468 (List of countries) [8]Labor force 155.063 million (includes 12.088 mil. unemployed, September 2012)[9]Labor force farming, forestry, and fishing: 0.7%by occupation manufacturing, extraction, transportation, and crafts: 20.3% managerial, professional, and technical: 37.3% sales and office: 24.2% other services: 17.6% note: figures exclude the unemployed (2009)Unemployment 7.8% (September 2012)[9] (-0.3%) [10]Average gross $45,230 (May 2011)salaryMain industries highly diversified, world leading, high- technology innovator, second largest industrial output in world; petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, miningEase of Doing 4th[11]Business Rank ExternalExports $1.497 trillion (2011 est.)[12]Export goods agricultural products (soybeans, fruit, corn) 9.2%, industrial supplies (organic chemicals) 26.8%, capital goods (transistors, aircraft, motor vehicle parts, computers, telecommunications equipment) 49.0%,
  3. 3. consumer goods (automobiles, medicines) 15.0%Main export Canada 19%, Mexico 13.3%, China 7%,partners Japan 4.5% (2011)Imports $2.236 trillion (2011 est.)[12]Import goods agricultural products 4.9%, industrial supplies 32.9% (crude oil 8.2%), capital goods 30.4% (computers, telecommunications equipment, motor vehicle parts, office machines, electric power machinery), consumer goods 31.8% (automobiles, clothing, medicines, furniture, toys)Main import China 18.4%, Canada 14.2%, Mexico 11.7%,partners Japan 5.8%, Germany 4.4% (2011)FDI stock $2.398 trillion (December 31, 2009 est.) Public financesPublic debt $16.158 trillion[13] / 100.37% of GDP [14](as of October 14, 2012)Budget deficit $1.09 trillion (2012) [15]Revenues $2.45 trillion (individual income tax, 46.1%; social insurance, 34.7%; corporate taxes, 9.9%; other, 9.3% - 2012) [15]Expenses $3.54 trillion (Social Security, 21.5%; defense, 18.4%; Medicare, 13.2%; interest, 7.3%; Medicaid, 7.1%; other, 32.4% - 2012) [15]Economic aid ODA $19 billion, 0.2% of GDP (2004)[16]Credit rating  Standard & Poors:[17] AA+ (Domestic) AA+ (Foreign) AAA (T&C Assessment) Outlook: Negative[18]  Moodys:[18]
  4. 4. AAA Outlook: Negative[19]  Fitch:[18] AAA Outlook: NegativeForeign US$140.607 billion (May 2011)reserves Main data source: CIA World Fact Book All values, unless otherwise stated, are in US dollars GNI per capita: United States ($48,450 2011) Higher GNI per capita compared to United States Lower GNI per capita compared to United States Historical GDP per capita
  5. 5. GDP per capita growth Throughout this article, the unqualified term "dollar" and the $ symbol refer to the US dollar.The economy of the United States is the worlds largest national economy andthe worlds second largest overall economy, the GDP of the EU beingapproximately $2 trillion larger. Its nominal GDP was estimated to be over$15 trillion in 2011,[4] approximately a quarter of nominal global GDP.[4] ItsGDP at purchasing power parity is the largest in the world, approximately afifth of global GDP at purchasing power parity.[4] The U.S. economy alsomaintains a very high level of output. The U.S. is one of the worlds wealthiestnations with per capita GDP (PPP) of $48,450, the 6th highest in theworld.[3] The U.S. is the largest trading nation in the world. Its four largestexport trading partners are as of 2010: Canada, Mexico, China, and Japan.The economy of the United States is a mixed economy[20][21] and has maintaineda stable overall GDP growth rate, a moderate unemployment rate, and highlevels of research and capital investment. It has been the worlds largestnational economy (not including colonial empires) since at leastthe 1890s.[22] As of 2012, the country remains the worlds largest manufacturer,representing a fifth of the global manufacturing output.[23] Of the worlds 500largest companies, 133 are headquartered in the United States. This is twice thetotal of any other country.[24]The labor market in the United States hasattracted immigrants from all over the world and its net migration rate is amongthe highest in the world. The U.S. is one of the top-performing economies instudies such as the Ease of Doing Business Index, the Global CompetitivenessReport,[25] and others. The United States is ranked first globally in the ITindustry competitiveness index.[26]
  6. 6. About 60% of the global currency reserves have been invested in the UnitedStates dollar, while 24% have been invested in the euro. The country is one ofthe world’s largest and most influential financial markets. The New York StockExchange (formally known as NYSE Euronext) is the worlds largest stockexchange by market capitalization.[27] Foreign investments made in the UnitedStates total almost $2.4 trillion, which is more than twice that of any othercountry.[28]American investments in foreign countries total over $3.3 trillion,which is almost twice that of any other country.[29] Total public and privatedebt was $50.2 trillion at the end of the first quarter of 2010, or 3.5 timesGDP.[30] In October 2012, the proportion of public debt was about 1.0043 timesthe GDP. [14] Domestic financial assets totaled $131 trillion and domesticfinancial liabilities totaled $106 trillion.[31]As of 2010, the European Union as awhole was the largest trading partner of the U.S., whereas Canada, China,and Mexico were the largest individual trading nations.The US economy is orderly reviewed with comprehensive economicdata analysis by the Beige Book[32] of the Federal Reserve [33]System, the Bureau of Economic Analysis of the Department ofCommerce,[34][35] the Bureau of Labor Statistics[36]of the United StatesDepartment of Labor and economic indicators[37] of the United States Census.
  7. 7. HistoryThe economic history of the United States has its roots in European settlementsin the 16th, 17th, and 18th centuries. The American colonies went frommarginally successful colonial economies to a small, independent farmingeconomy, which in 1776 became the United States of America. In 180 years theUnited States grew to a huge, integrated, industrialized economy that stillmakes up over a quarter of the world economy[citation needed]. As a result, theU.S.s GDP per capita converged on and eventually surpassed that of the U.K.,as well as other nations that it previously trailed economically. The economyhas maintained high wages, attracting immigrants by the millions from all overthe world.[38]In the 19th century, recessions frequently coincided with financial crises.The Panic of 1837 was followed by a five-year depression, with the failure ofbanks and then-record-high unemployment levels.[39] Because of the greatchanges in the economy over the centuries, it is difficult to compare the severityof modern recessions to early recessions.[40] Recessions after World War IIappear to have been less severe than earlier recessions, but the reasons for thisare unclear.[41]Worlds largest economyThe United States has been the worlds largest national economy since at leastthe 1920s.[22] The Empire State Building, completed in 1931 at the beginning of the Great Depression, remained the worlds tallest building for decades.
  8. 8. For many years following the Great Depression of the 1930s, when danger ofrecession appeared most serious, the government strengthened the economy byspending heavily itself or cutting taxes so that consumers would spend more,and by fostering rapid growth in the money supply, which also encouragedmore spending. Ideas about the best tools for stabilizing the economy changedsubstantially between the 1930s and the 1980s. From the New Deal era thatbegan in 1933, to the Great Society initiatives of the 1960s, national policymakers relied principally on fiscal policy to influence the economy. Theapproach, advanced by British economist John Maynard Keynes, gave electedofficials a leading role in directing the economy, since spending and taxes arecontrolled by the U.S. President and the Congress. The "Baby Boom" saw adramatic increase in fertility in the period 1942–1957; it was caused by delayedmarriages and childbearing during depression years, a surge in prosperity, ademand for suburban single-family homes (as opposed to inner city apartments)and new optimism about the future. The boom crested about 1957, then slowlydeclined.[42] A period of high inflation, interest rates and unemployment after1973 weakened confidence in fiscal policy as a tool for regulating the overallpace of economic activity.[43]The U.S. economy grew by an average of 3.8% from 1946 to 1973, while realmedian household income surged 74% (or 2.1% a year).[44][45] The economysince 1973, however, has been characterized by both slower growth (averaging2.7%), and nearly stagnant living standards, with household incomes increasingby 10%, or only 0.3% annually.[46] The worst recession in recent decades, interms of lost output, occurred during the 2008 financial crisis, when GDP fellby 5.0% from the spring of 2008 to the spring of 2009. Other significantrecessions took place in 1957–58, when GDP fell 3.7%, following the 1973 oilcrisis, with a 3.1% fall from late 1973 to early 1975, and in the 1981–82recession, when GDP dropped by 2.9%.[47][48] Recent, mild recessions haveincluded the 1990–91 downturn, when output fell by 1.3%, and the 2001recession, in which GDP slid by 0.3%; the 2001 downturn lasted just eightmonths.[48] The most vigorous, sustained periods of growth, on the other hand,took place from early 1961 to mid 1969, with an expansion of 53% (5.1% ayear), from mid 1991 to late in 2000, at 43% (3.8% a year), and from late 1982to mid 1990, at 37% (4% a year).[47]
  9. 9. In the 1970s and 1980s, it was popular in the U.S. to believe that Japanseconomy would surpass that of the United States, but this didnt happen.[49]Improving economies of some emerging countriesSince the 1970s several emerging countries have begun to close the economicgap with the United States. In most cases, this has been due to moving themanufacture of goods formerly made in the U.S. to countries where they couldbe made for sufficiently less money to cover the cost of shipping plus a higherprofit.In other cases, some countries have gradually learned to produce the sameproducts and services that previously only the U.S. and a few other countriescould produce. Real income growth in the U.S. has slowed.The North American Free Trade Agreement, or NAFTA, created the largesttrade bloc in the world in 1994.Since 1976, the US has sustained trade deficits with other nations. Since1982, current account deficits; the nations long-standing surplus in its trade inservices was maintained, however, and reached US$140 billion yearly in 2008and 2009. In recent years, the primary economic concerns have centered on:high household debt ($11 trillion, including $2.5 trillion in revolvingdebt),[50] high net national debt ($9 trillion), high corporate debt ($9 trillion),high mortgage debt (over $15 trillion as of 2005 year-end), high unfundedMedicare liability ($30 trillion[citation needed]), high unfunded Social Securityliability ($12 trillion)[citation needed], high external debt(amount owed to foreignlenders), high trade deficits, a serious deterioration in the United States netinternational investment position(NIIP) (−24% of GDP),[51] and highunemployment.[52] In 2006, the U.S. economy had its lowest saving rate since1933.[53] These issues have raised concerns among economists and nationalpoliticians.[54]The United States economy experienced a crisis in 2008 led by a derivativesmarket and subprime mortgage crisis, and a declining dollar value.[55] OnDecember 1, 2008, the NBER declared that the United States entereda recession in December 2007, citing employment and production figures aswell as the third quarter decline in GDP.[56] The recession did, however, lead to
  10. 10. a reduction in record trade deficits, which fell from $840 billion annuallyduring the 2006–08 period, to $500 billion in 2009,[47][57] as well as to higherpersonal savings rates, which jumped from a historic low of 1% in early 2008,to nearly 5% in late 2009. The merchandise trade deficit rose to $670 billion in2010; savings rates, however, remained at around 5%.[58]The U.S. public debt was $909 billion in 1980, an amount equal to 33.3% ofAmericas gross domestic product (GDP; by 1990, that number had more thantripled to $3.2 trillion – or 55.9% of GDP.[59] In 2001 the national debt was$5.7 trillion; however, the debt-to-GDP ratio remained at 1990 levels.[60] Debtlevels rose quickly in the following decade, and on January 28, 2010, the USdebt ceiling was raised to $14.3 trillion dollars.[61] Based on the 2010 U.S.budget, total national debt will grow to nearly 100% of GDP, versus a level ofapproximately 80% in early 2009.[62] The White House estimates that thegovernment’s tab for servicing the debt will exceed $700 billion a year in2019,[63] up from $202 billion in 2009.[64]The U.S. Treasury statistics indicate that, at the end of 2006, non-US citizensand institutions held 44% of federal debt held by the public.[65] China, holding$801.5 billion in treasury bonds, is the largest foreign financier of the recordU.S. public debt.[66]US share of world GDP (nominal) peaked in 1985 with 32.74% of global GDP(nominal). Its second highest share was 32.24% in 2001.US share of world GDP (PPP) peaked in 1999 with 23.78% of global GDP(PPP). While its share has been declining each year since 1999, it is still thehighest in the world. Overview United States wealth compared to the rest of the world in the year 2000
  11. 11. 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 theprivate sector by allowing the private sector to make the majority of economicdecisions in determining the direction and scale of what the U.S. economyproduces.[67] This is enhanced by relatively low levels of regulation andgovernment involvement,[68] as well as a court system that generallyprotects property rights and enforces contracts. Today, the United States ishome to 29.6 million small businesses, 30% of the worlds millionaires, 40% ofthe worlds billionaires, as well as 139 of the worlds 500 largestcompanies.[24][69][70][71] From its emergence as an independent nation, the UnitedStates has encouraged science and innovation. As a result, the United States hasbeen the birthplace of 161 of Britannicas 321 Great Inventions, including itemssuch as the airplane, internet, microchip, laser, cell-phone, refrigerator,email, microwave, LCD and LED technology, air conditioning, assembly line,supermarket, bar code, electric motor, and ATM.[72]The United States is rich in mineral resources and fertile farm soil, and it isfortunate to have a moderate climate. It also has extensive coastlines on boththe Atlantic and Pacific Oceans, as well as on the Gulf of Mexico. Rivers flowfrom far within the continent and the Great Lakes—five large, inland lakesalong the U.S. border with Canada—provide additional shipping access. Theseextensive waterways have helped shape the countrys economic growth over theyears and helped bind Americas 50 individual states together in a singleeconomic unit.[73]The number of workers and, more importantly, their productivity helpdetermine the health of the U.S. economy. Throughout its history, the UnitedStates has experienced steady growth in the labor force, a phenomenon that isboth cause and effect of almost constant economic expansion. Until shortly
  12. 12. after World War I, most workers were immigrants from Europe, theirimmediate descendants, or African Americans who were mostly slaves takenfrom Africa, or slave descendants.[74] Beginning in the late 20th century,many Latin Americans immigrated, followed by large numbers of Asians afterthe removal of nation-origin based immigration quotas.[75] The promise of highwages brings many highly skilled workers from around the world to the UnitedStates. Over 13 million people entered the United States during the 1990salone.[76]Labor mobility has also been important to the capacity of the Americaneconomy to adapt to changing conditions.[citation needed] When immigrants floodedlabor markets on the East Coast, many workers moved inland, often to farmlandwaiting to be tilled. Similarly, economic opportunities in industrial, northerncities attracted black Americans from southern farms in the first half of the 20thcentury, in what was known as the Great Migration.In the United States, the corporation has emerged as an association of owners,known as stockholders, who form a business enterprise governed by a complexset of rules and customs. Brought on by the process of mass production,corporations, such as General Electric, have been instrumental in shaping theUnited States. Through the stock market, American banks and investors havegrown their economy by investing and withdrawing capital from profitablecorporations. Today in the era of globalization, American investors andcorporations have influence all over the world. The American government isalso included among the major 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 financialindustry.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, asthe government uses a capitalist system. Strong government regulation in theU.S. economy started in the early 1900s with the rise of the ProgressiveMovement; prior to this the government promoted economic growth throughprotective tariffs and subsidies to industry, built infrastructure, and establishedbanking policies, including the gold standard, to encourage savings andinvestment in productive enterprises.[citation needed] On June 26, 2009, Jeff Immelt,the CEO of General Electric, called for the United States to increase its
  13. 13. manufacturing base employment to 20% of the workforce, commenting that theU.S. has outsourced too much in some areas and can no longer rely on thefinancial sector and consumer spending to drive demand.[77] Employment Percent of US population employed, 1995–2012 Average annual growth in U.S. employment, by top income tax bracket rate, 1940–2011There are 4,352 colleges, universities, and junior colleges in the UnitedStates.[78] In 2007, Americans stood second only to Canada in the percentage of35 to 64 year olds holding at least two-year degrees. Among 25 to 34 year olds,the two-year degree rate is the tenth highest. In 2003 a Supreme Court decisionconcerning affirmative action in universities allowed educational institutions toconsider race as a factor in admitting students.[79] The labor market in theUnited States has attracted immigrants from all over the world and its netmigration rate is among the highest in the world.
  14. 14. For example, the brain drain from Europe to the United States means that some400,000 European science and technology graduates now live in theU.S.[80] Nearly 14 million immigrants came to the United States from 2000 to2010.[81] More than 40 percent of the 2010 Fortune 500 companies werefounded by immigrants or their children. They founded seven of the ten mostvaluable brands in the world.[82][83] United States Labor Force Participation Rate from 1948 to 2011 by gender. Men are represented in light blue, women in pink, and the total in black.There are approximately 154.4 million employed individuals in the US.Government is the largest employment sector with 22 million.[84] Smallbusinesses are the largest employer in the country representing 53% of USworkers.[70] The second largest share of employment belongs to largebusinesses that employ 38% of the US workforce.[70] The private sectoremploys 91% of Americans. Government accounts for 8% of all US workers.Over 99% of all employing organizations in the US are smallbusinesses.[70] The 30 million small businesses in the U.S. account for 64% ofnewly created jobs (those created minus those lost).[70] Jobs in small businessesaccounted for 70% of those created in the last decade.[85]The proportion ofAmericans employed by small business versus large business has remainedrelatively the same year by year as some small businesses become largebusinesses and just over half of small businesses survive more than 5years.[70] Amongst large businesses, several of the largest companies andemployers in the world are American companies. Amongst them are Walmart,the largest company and the largest private sector employer in the world, whichemploys 2.1 million people world-wide and 1.4 million in the US alone.[86][87]
  15. 15. United States mean duration of unemployment 1948–2010.There are nearly 30 million small businesses in the U.S. Minorities suchas Hispanics, African Americans, Asian Americans, and Native Americans(35% of the countrys population),[88]own 4.1 million of the countrysbusinesses. Minority-owned businesses generate almost $700 billion in revenueand employ almost 5 million workers in the U.S.[70] US unemployment by state in September 2009.[89] ≤4.5% ≤7.5% ≤10.5% ≤5.5% ≤8.5% ≤11.5% ≤6.5% ≤9.5% >11.5%The median household income in the US as of 2008 is $52,029.[90] About284,000 working people in the US have two full-time jobs and 7.6 million havea part-time job in addition to their full-time employment.[84] Of workingindividuals in the US, 12% belong to a labor union; most union members aregovernment workers.[84]In May 2009, the unemployment rate was 9.4%.[91] A broader measure ofunemployment (taking into account marginally attached workers, thoseemployed part-time for economic reasons, and discouraged workers) was15.9%.[92] In 2009 and 2010, following the financial crisis of 2007–2010, the
  16. 16. emerging problem of jobless recoveries resulted in record levels of long-termunemployment with over 6 million workers looking for work longer than 6months as of January, 2010. This particularly affected older workers.[52] Sincethe recessions end in June 2009 in the United States, immigrants have gained656,000 jobs, while U.S.-born workers lost more than a million jobs.[93]In April 2010, the official unemployment rate was 9.9%, but the government’sbroader U-6 unemployment rate was 17.1%.[94] In the period between February2008 and February 2010, the number of people working part-time for economicreasons has increased by 4 million to 8.8 million, an 83% increase in part-timeworkers during the two-year period.[95]Female unemployment continued to be significantly lower than maleunemployment (7.5% vs. 9.8%). The unemployment among Caucasianscontinues to be much lower than African American unemployment (at 8.5% vs.15.8%).[91] The youth unemployment rate was 18.5% in July 2009, the highestJuly rate since 1948.[96] The unemployment rate of young African Americanmen was 34.5% in October 2009.[97] Officially, Detroit’s unemployment rate is27%, but Detroit News suggests that nearly half of this city’s working-agepopulation may be unemployed.[98]In 1955, 55% of Americans worked in services, between 30% and 35% inindustry, and between 10% and 15% in agriculture. By 1980, over 65% wereemployed in services, between 25% and 30% in industry, and less than 5% inagriculture.[99]Research, development, and entrepreneurship Tennessee in 1897. The United States was a leader in the adoption of electric lighting.
  17. 17. The United States has been a leader in scientific research and technologicalinnovation since the late 19th century. In 1876, Alexander Graham Bell wasawarded the first U.S. patent for the telephone. Thomas Edisons laboratorydeveloped the phonograph, the first long-lasting light bulb, and the firstviable movie camera. Nikola Tesla pioneered alternating current, the AC motor,and radio. In the early 20th century, the automobile companies of Ransom E.Olds and Henry Ford popularized the assembly line. The Wright brothers, in1903, made the first sustained and controlled heavier-than-air poweredflight.[100] The late Steve Jobs and Bill Gates were two of the best-known American entrepreneurs.Entrepreneurship is the act of being an entrepreneur, which can be defined as"one who undertakes innovations, finance and business acumen in an effort totransform innovations into economic goods". This may result in neworganizations or may be part of revitalizing mature organizations in response toa perceived opportunity. The most obvious form of entrepreneurship is that ofstarting new businesses (referred as Startup Company); however, in recentyears, the term has been extended to include social and political forms ofentrepreneurial activity. When entrepreneurship is describing activities within afirm or large organization it is referred to as intra-preneurship and may includecorporate venturing, when large entities spin-off organizations.[101]According to Paul Reynolds, entrepreneurship scholar and creator of the GlobalEntrepreneurship Monitor, "by the time they reach their retirement years, halfof all working men in the United States probably have a period of self-employment of one or more years; one in four may have engaged in self-employment for six or more years. Participating in a new business creation is acommon activity among U.S. workers over the course of their careers."[102] And
  18. 18. in recent years has been documented by scholars such as David Audretsch to bea major driver of economic growth in both the United States and WesternEurope.Venture capital, as an industry, originated in the United States and it is stilldominated by the U.S.[103] According to the National Venture CapitalAssociation 11% of private sector jobs come from venture capital backedcompanies and venture capital backed revenue accounts for 21% of USGDP.[104]Some new American businesses raise investments from angelinvestors (venture capitalists). In 2010 healthcare/medical accounted for thelargest share of angel investments, with 30% of total angel investments (vs.17% in 2009), followed by software (16% vs. 19% in 2007), biotech (15% vs.8% in 2009), industrial/energy (8% vs. 17% in 2009), retail (5% vs. 8% in2009) and IT services (5%).[105][clarification needed]Americans are ―venturesome consumers‖ who are unusually willing to try newproducts of all sorts, and to pester manufacturers to improve their products.[106] Income and wealth A middle-class suburban development inSan Jose, CaliforniaAccording to the United States Census Bureau, the pretax median householdincome in 2007 was $50,233. The median ranged from $68,080 in Maryland to$36,338 in Mississippi.[107]
  19. 19. In 2007, the median real annual household income rose 1.3% to $50,233,according to the Census Bureau.[108] the real median earnings of men whoworked 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.[109] The averagehome in the United States has more than 700 square feet per person, which is50%–100% more than the average in other high-income countries. Even in thelowest income percentiles people enjoy more space – average 400 square feetper person – than middle classes in Europe do. Likewise, ownership rates ofgadgets and amenities are exceptionally high compared to othercountries.[110][111][112]The recently released US Income Mobility Study showed economic growthresulted in rising incomes for most taxpayers over the period from 1996 to2005. Median incomes of all taxpayers increased by 24 percent after adjustingfor inflation. The real incomes of two-thirds of all taxpayers increased over thisperiod. Income mobility of individuals was considerable in the U.S. economyduring the 1996 through 2004 period with roughly half of taxpayers who beganin the bottom quintile moving up to a higher income group within 10 years. Inaddition, the median incomes of those initially in the lower income groupsincreased more than the median incomes of those initially in the higher incomegroups.[113]Between June 2007 and November 2008 the global recession led to falling assetprices around the world. Assets owned by Americans lost about a quarter oftheir value.[114] Since peaking in the second quarter of 2007, household wealthis down $14 trillion.[115] The Fed also said that at the end of 2008, the debtowed by nonfinancial sectors was $33.5 trillion, including household debtvalued at $13.8 trillion.[116] About 30% of the entire worlds millionairepopulation resides in the United States (in 2009).[117] The EconomistIntelligence Unit estimated in 2008 that there were 16,600,000 millionaires inthe U.S.[118] Furthermore, 34% of the worlds billionaires are American (in2011).[69][119]
  20. 20. Financial position Components of total US debt as a fraction of GDP 1945–2009 Boeing 747-8 wing-fuselage sections during final assembly.The overall financial position of the United States as of 2009 includes$50.7 trillion of debt owed by US households, businesses, and governments,representing more than 3.5 times the annual gross domestic product of theUnited States.[30] As of the first quarter of 2010, domestic financialassetsA totaled $131 trillion and domestic financial liabilities [31]$106 trillion. Tangible assets in 2008 (such as real estate and equipment) forselected sectorsB totaled an additional $56.3 trillion.[120]Since 2010, the U.S. Treasury has been obtaining negative real interest rates ongovernment debt.[121] Such low rates, outpaced by the inflation rate, occur whenthe market believes that there are no alternatives with sufficiently low risk, orwhen popular institutional investments such as insurance companies, pensions,or bond, money market, and balanced mutual funds are required or choose toinvest sufficiently large sums in Treasury securities to hedge againstrisk.[122][123] Lawrence Summers, Matthew Yglesias and other economists statethat at such low rates, government debt borrowing saves taxpayer money, and
  21. 21. improves creditworthiness.[124][125] In the late 1940s through the early 1970s, theUS and UK both reduced their debt burden by about 30% to 40% of GDP perdecade by taking advantage of negative real interest rates, but there is noguarantee that government debt rates will continue to stay so low. [122][126] InJanuary, 2012, the U.S. Treasury Borrowing Advisory Committee of theSecurities Industry and Financial Markets Association unanimouslyrecommended that government debt be allowed to auction even lower, atnegative absolute interest rates.[127]CompositionMost of the U.S. economy is composed of services.The United States is the worlds largest manufacturer, with a 2009 industrialoutput of US$2.33 trillion. Its manufacturing output is greater than of Germany,France, India, and Brazil combined.[128] Main industries include petroleum,steel, automobiles, construction machinery, aerospace, agricultural machinery,telecommunications, chemicals, electronics, food processing, consumer goods,lumber, and mining. The US leads the world in airplanemanufacturing,[129] which represents a large portion of US industrial output.American companies such as Boeing, Cessna (see: Textron), LockheedMartin (see: Skunk Works), and General Dynamics produce a vast majority ofthe worlds civilian and military aircraft in factories stretching across the UnitedStates.The manufacturing sector of the U.S. economy has experienced substantial joblosses over the past several years.[130][131] In January 2004, the number of suchjobs stood at 14.3 million, down by 3.0 million jobs, or 17.5 percent, since July2000 and about 5.2 million since the historical peak in 1979. Employment inmanufacturing was its lowest since July 1950.[132] The number of steel workersfell from 500,000 in 1980 to 224,000 in 2000.[133]The U.S. produces approximately 18% of the worlds manufacturing output, anumber that has declined as other nations developed competitive manufacturingindustries.[128] The job loss during this continual volume growth is the result ofmultiple factors including increased productivity, trade, and secular economictrends.[134] In addition, growth in telecommunications, pharmaceuticals, aircraft,
  22. 22. heavy machinery and other industries along with declines in low end, low skillindustries such as clothing, toys, and other simple manufacturing have resultedin U.S. jobs being more highly skilled and better paying.[citation needed] There hasbeen much debate within the United States on the decline in manufacturing jobsare related to American Unions and lower foreign wages.[135][136][137]Although agriculture comprises less than two percent of the economy, theUnited States is a net exporter of food. With vast tracts oftemperate arable land,technologically advanced agribusiness, and agricultural subsidies, the UnitedStates controls almost half of world grain exports.[138] Products include wheat,corn, other grains, fruits, vegetables, cotton; beef, pork, poultry, dairyproducts; forest products; fish. Notable companies and markets A typical Walmart discount department store (location: Laredo, Texas).In 2011, the 20 largest U.S.-based companies byrevenue were Walmart, ExxonMobil, Chevron, ConocoPhillips, FannieMae, General Electric, Berkshire Hathaway, General Motors, Ford MotorCompany and Hewlett-Packard, AT&T, Cargill, McKesson Corporation Bankof America, Federal Home Loan Mortgage Corporation, AppleInc., Verizon, JPMorgan Chase, and Cardinal Health.In 2011, four of the worlds ten largest companies by market capitalization wereAmerican: Exxon Mobil, Apple Inc., Chevron Corporation, and Microsoft.
  23. 23. According to Fortune Global 500 2011, the ten largest U.S.employers were Walmart, U.S. Postal Service, IBM, UPS, McDonalds, TargetCorporation, Kroger, Home Depot, General Electric, and Sears Holdings.Apple, Google, IBM, McDonalds, and Microsoft are the worlds five mostvaluable brands in an index published by Millward Brown.[139]A 2012 Deloitte report published in STORES magazine indicated that of theworlds top 250 largest retailers by retail sales revenue in fiscal year 2010, 32%of those retailers were based in the United States, and those 32% accounted for41% of the total retail sales revenue of the top 250.[140] Amazon.com is theworlds largest online retailer.Half of the worlds 20 largest semiconductor manufacturers by sales wereAmerican-origin in 2011.[141]Most of the worlds largest charitable foundations were founded by Americans.American producers create nearly all of the worlds highest-grossing films.Many of the worlds best-selling music artists are based in the UnitedStates. U.S. tourism sector welcomes approximately 60 million internationalvisitors every year. Energy, transportation, and telecommunications Port of Houston, one of the largest ports in the United States.The United States is the second largest energy consumer in total use.[142] TheU.S. ranks seventh in energy consumption per-capita after Canada and anumber of other countries.[143][144] The majority of this energy is derivedfrom fossil fuels: in 2005, it was estimated that 40% of the nations energy
  24. 24. came from petroleum, 23% from coal, and 23% from natural gas. Nuclearpower supplied 8.4% and renewable energy supplied 6.8%, which was mainlyfrom hydroelectric dams although other renewables are included.[145] Americandependence on oil imports grew from 24% in 1970 to 65% by the end of 2005.At that rate of unchecked import growth, the US would have been 70% to 75%reliant on foreign oil by about 2015.[146] Transportation has thehighest consumption rates, accounting for approximately 68.9% of the oil usedin the United States in 2006,[147] and 55% of oil use worldwide as documentedin the Hirsch report.In 2011, the United States imported 3,324 million barrels of crude oil,compared to 3,377 million barrels in 2010.[148] While the U.S. is the largestimporter of fuel, the Wall Street Journal reported in 2011 that the country wasabout to become a net fuel exporter for the first time in 62 years. The paperreported expectations that this would continue until 2020.[149] In fact, petroleumwas the major export from the country in 2011.[150]Internet was developed in the U.S. and the country hosts many of the worldslargest hubs. Finance The New York Stock Exchange is the largest stock exchange in the world.
  25. 25. Measured by value of its listed companies securities, the New York StockExchange is more than three times larger than any other stock exchange in theworld.[151] As of October 2008, the combined capitalization of all domesticNYSE listed companies was US$10.1 trillion.[152]NASDAQ is another American stock exchange and the worlds 3rd largestexchange after the New York Stock Exchange and Japans Tokyo StockExchange. However NASDAQs trade value is larger than JapansTSE.[151] NASDAQ is the largest electronic screen-based equitysecurities trading market in the U.S. With approximately 3,800 companies andcorporations, it has more trading volume per hour than any other stockexchange.[153] International trade Graphical depiction of United States product exports in 28 color coded categories. U.S. Trade in Goods and Services 1960–2010
  26. 26. The United States is the worlds largest trading nation. There is a high amountof U.S. dollars in circulation all around the planet. The dollar is also used as thestandard unit of currency in international markets for commodities such as goldand petroleum.In 2010, U.S. exports amounted to $1.3 trillion and imports amounted to$1.9 trillion. Trade deficit was $634.9 billion.[154] The deficit on petroleumproducts was $270 billion. The trade deficit with China was $295 billion in2011,[155] a new record and up from $304 million in 1983.[156]The United Stateshad a $168 billion surplus on trade in services, and $803 billion deficit on tradein goods in 2010.[157][158] China has expanded its foreign exchange reserves,which included $1.6 trillion of U.S. securities as of 2009.[159] In 2010, theten largest trading partners of the U.S. were Canada, China, Mexico, Japan,Germany, the United Kingdom, South Korea, France, Taiwan, and Brazil.According to the KOF Index of Globalization and the Globalization Index byA.T. Kearney/Foreign Policy Magazine, the U.S. has a relatively high degree ofglobalization. U.S. workers send a third of all remittances in the world.[160] Currency and central bank United States historical inflation rate 1666–2004The United States dollar is the unit of currency of the United States. The U.S.dollar is the currency most used in international transactions. [161] Severalcountries use it as their official currency, and in many others it is the de factocurrency.[162]The federal government attempts to use both monetary policy (control of themoney supply through mechanisms such as changes in interest rates) and fiscalpolicy (taxes and spending) to maintain low inflation, high economic growth,and low unemployment. A private central bank, known as the Federal Reserve,
  27. 27. was formed in 1913 to supposedly provide a stable currency and monetarypolicy. Despite significant loss of value due to inflation [163]since going offthe international gold standard (August 14, 1971), the U.S. dollar has beenregarded as one of the more stable currencies in the world and many nationsback their own currency with U.S. dollar reserves.The U.S. dollar has maintained its position as the worlds primary reservecurrency, although it is gradually being challenged in that role.[164] Almost two-thirds of currency reserves held around the world are held in US dollars,compared to around 25% for the next most popular currency, theEuro.[165] Rising US national debt and quantitative easing has caused some topredict that the US Dollar will lose its status as the worlds reserve currency,however these predictions have not come to fruition.[166]The dollar was redeemable from the gold standard and/or silver standard from1785 until August 1971, when it became a floating fiat currency because ofincreased government spending not covered by taxes. Law and government Revenue and Expense as % GDP.
  28. 28. Deficit and debt increases 2001–2012.The United States is among the best-ranking economies in indices such asthe Ease of Doing Business Index, Economic Freedom of the World, Index ofEconomic Freedom, and Global Enabling Trade Report.RegulationsThe U.S. federal government 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 create state-regulated monopolies such as electricutilities from while allowing prices in the level that would ensure them normalprofits. At times, the government has extended economic control to other kindsof industries as well. In the years following the Great Depression, it devised acomplex system to stabilize prices for agricultural goods, which tend tofluctuate wildly in response to rapidly changing supply and demand. A numberof other industries—trucking and, later, airlines—successfully soughtregulation themselves to limit what they considered as harmful price-cutting, aprocess called regulatory capture.[167]Another form of economic regulation, antitrust law, seeks to strengthen marketforces so that direct regulation is unnecessary. The government—and,sometimes, private parties—have used antitrust law to prohibit practices ormergers that would unduly limit competition.[167]Bank regulation in the United States is highly fragmented compared toother G10 countries where most countries have only one bank regulator. In theU.S., banking is regulated at both the federal and state level. The U.S. also hasone of the most highly regulated banking environments in the world; however,many of the regulations are not safety and soundness related, but are insteadfocused on privacy, disclosure, fraud prevention, anti-money laundering, anti-
  29. 29. terrorism, anti-usury lending, and promoting lending to lower-incomesegments.[citation needed]Since the 1970s, government has also exercised control over private companiesto achieve social goals, such as improving the publics health and safety ormaintaining a healthy environment. For example, the Occupational Safety andHealth Administration provides and enforces standards for workplace safety,and the United States Environmental Protection Agency provides standards andregulations to maintain air, water, and land resources. The U.S. Food and DrugAdministration regulates what drugs may reach the market, and also providesstandards of disclosure for food products.[167]American attitudes about regulation changed substantially during the final threedecades of the 20th century. Beginning in the 1970s, policy makers grewincreasingly convinced that economic regulation protected companies at theexpense of consumers in industries such as airlines and trucking. At the sametime, technological changes spawned new competitors in some industries, suchas telecommunications, that once were considered natural monopolies. Bothdevelopments led to a succession of laws easing regulation.[167]While leaders of Americas two most influential political parties generallyfavored economic deregulation during the 1970s, 1980s, and 1990s, there wasless agreement concerning regulations designed to achieve social goals. Socialregulation had assumed growing importance in the years following theDepression and World War II, and again in the 1960s and 1970s. During the1980s, the government relaxed labor, consumer and environmental rules basedon the idea that such regulation interfered with free enterprise, increased thecosts of doing business, and thus contributed to inflation. The response to suchchanges is mixed; many Americans continued to voice concerns about specificevents or trends, prompting the government to issue new regulations in someareas, including environmental protection.[167]Where legislative channels have been unresponsive, some citizens have turnedto the courts to address social issues more quickly. For instance, in the 1990s,individuals, and eventually the government itself, sued tobacco companies overthe health risks of cigarette smoking. The 1998 Tobacco Master SettlementAgreement provided states with long-term payments to cover medical costs totreat smoking-related illnesses.[167]
  30. 30. Historical federal marginal tax rates for income for the lowest and highest income earners in the US.[168]Between 2000 and 2008, economic regulation in the United States saw the mostrapid expansion since the early 1970s.[169] The number of new pages in theFederal Registry, a proxy for economic regulation, rose from 64,438 new pagesin 2001 to 78,090 in new pages in 2007, a record amount ofregulation.[169] economically significant regulations, defined as regulationswhich cost more than $100 million a year, increased by 70%. [169] Spending onregulation increased by 62% from $26.4 billion to $42.7 billion.[169] Taxation The U.S. federal effective corporate tax rate has become much lower than the nominal rate because of tax shelters such as tax havens.Taxation in the United States is a complex system which may involve paymentto at least four different levels of government and many methods of taxation.Taxes are levied by the federal government, by the state governments, and oftenby local governments, which may include counties,
  31. 31. municipalities, township, school districts, and other special-purpose districts,which include fire, utility, and transit districts.Average tax rate percentages for the highest-income U.S. taxpayers, 1945-2009Forms of taxation include taxes on income, property, sales, imports, payroll,estates and gifts, as well as various fees. When taxation by all governmentlevels taken into consideration, the total taxation as percentage of GDP wasapproximately a quarter of GDP in 2011.[170]Share of black market in the U.S.economy is very low compared to other countries.[171]Expenditure Fiscal Year 2011 U.S. Federal Spending – Cash or Budget Basis.
  32. 32. Fiscal Year 2011 U.S. Federal Receipts.The United States public-sector spending amounts to about one-third of theGDP.Each level of government provides many direct services. The federalgovernment, for example, is responsible for national defense, backs researchthat often leads to the development of new products, conducts spaceexploration, and runs numerous programs designed to help workers developworkplace skills and find jobs (including higher education). Governmentspending has a significant effect on local and regional economies—and even onthe overall pace of economic activity.[citation needed]State governments, meanwhile, are responsible for the construction andmaintenance of most highways. State, county, or city governments play theleading role in financing and operating public schools. Local governments areprimarily responsible for police and fire protection.[citation needed]The welfare system in the United States began in the 1930s, during the GreatDepression. After the Great Society legislation of the 1960s, for the first time "apoor person who was neither elderly nor crippled could eke out a livelihoodfrom the state".[172]Overall, federal, state, and local spending accounted for almost 28% of grossdomestic product in 1998.[173]As of January 20, 2009, the total U.S. federal debt was $10.627 trillion.[174] Theborrowing-cap debt ceiling as of 2005 stood at $8.18 trillion.[175] In March2006, Congress raised that ceiling an additional $0.79 trillion to $8.97 trillion,which is approximately 68% of GDP.[176]Congress has used this method to dealwith an encroaching debt ceiling in previous years, as the federal borrowinglimit was raised in 2002 and 2003.[177] As of October 4, 2008, the "Emergency
  33. 33. Economic Stabilization Act of 2008" raised the current debt ceiling to US$11.3 trillion.[178]The federal governments debt rose by $1.09 trillion in 2012 [15], and now standsat $16.158 trillion.[13] While the U.S. public debt is the worlds largest inabsolute size, another measure is its size relative to the nations GDP. As ofOctober 2012 the debt was 100.4% of GDP. [14] This debt, as a percent of GDP,is still less than the debt of Japan (192%) (the overwhelming number of ownersof JGBs are Japanese)[179] and roughly equivalent to those of a few westernEuropean nations.[180]