UNITED STATES ECONOMY
The United States has world largest single nation economy since 1920, it has the most technologically- advance and powerful, and most diverse economy in the world. Even at the time of great depression in 1930’s when recession appeared to be most serious, US strengthened their economy by cutting taxes and fostering rapid growth in the money supply. This helps in stabilizing the economy change in between 1930 and 1980.
US economy experienced the second-longest period of growth in the nation's history in 1990s. The economy rises at an average rate of 3 to 4 percent per year and unemployment rate fell below 5 %, and there were spectacular gains in the stock market. In 1998, 9 out of the 10 most profitable companies in the world were American. Unlike other countries, American corporations have very little government control over following issues like product development, plant openings or closures, and employment. In 2001 this long period of growth ended due to crash in the high technological sector.
Economy of United States
Economy of the United States is the world's largest economy with nominal GDP of $16.8 trillion as of 2013. While the United States accounts for only 4 % of the world's total population, its GDP is 26% of the world's total economic output. US gdp at PPP (purchasing power parity) is also largest in the world. US economy has a mixed economy and has sustained its overall growth rate, employment rate and high level of capital investment
The United States has abundant and considerable natural resources, a well-developed infrastructure which make the transportation easy, and highly productivity agricultural resources. These natural resources include coal, copper, lead, nickel, silver, tungsten, zinc, petroleum, natural gas, phosphates, uranium, bauxite, gold, iron, mercury, and timber. The United Nation is largest producer of natural gas and third largest producer of Oil.
United States has diverse economy but still services dominate economic activity. Services accounts for 80% of country’s GDP whereas manufacturing and agriculture accounts for 18% and 2% respectively. The fastest growing areas of service sector are financial services, health care and IT. The country has one of the world’s largest and most dominant Financial Market. The New York Stock Exchange is so far the world's largest stock exchange market. American manufacturing and agriculture sector always remain strong despite of decline in GDP. In 2010 the country remains the world's largest manufacturer. Agriculture sector became more productive due to corrosion of family farm and replacement by large corporate farms.
The Unemployment rate and government broader U-6 unemployment rate, which includes part time unemployed people in the United States were 7.7% or 12.0 million people, and 14.3% or 22.2 million people respectively in 2013. United States is net provider of economic aid and provides funds to many international organizations. It provides $6.9 billion in direct aid to nations and 50% of its budget for NATO Operations. Investment made by Americans in other countries is $3.3 trillion and foreign investment made in US is $2.4 trillion Consumer spending 71% of the US economy in 2013.Net migration rate of US is highest in the world its labor market has attracted immigrants from all over the world. United States is most rapidly growing and changing sector which involves trade with other countries. The level of goods and services imported from other nations has increased considerably and on the other hand United States goods and services are also sold as export in other nations. This international trade and policies that encourage or restrict the growth of import and export have large impact on the US Economy.
In spite of impressive economy United States economy is facing many problems like considerable current account and budget deficits - including significant budget shortages for state governments. Majorly all the products and services manufactured in the nation are consumed internally, and economy cannot produce enough goods to meet with consumer demand. As a result, United States import is higher than its exports which led to Trade deficit. United states have trade surpluses in services and agriculture sector which get adjusted with manufacturing trade deficits. In 2010 and 2011, the national budget deficit of United States reached nearly 9% of GDP in 2010 and 2011. In 2012 the government reduced the growth of spending and the deficit reduces to 7.6% of GDP. Growth of a 2-tier economy is another major problem for the economy, where some Americans enjoy very high income level while others remain in poverty. In 1999, 12.7 percent of Americans lived below the poverty line in spite of the strong economic growth. Other Long-term problems include, inadequate investment in loss making infrastructure, increase in medical and pension costs of an aging population, shortage of energy.
Impact on World’s economy
United States is largest trading nation in world with largest number of import and export of goods and services than any other country. And one of the biggest ways US Economy affects the world economy is by its buying power. As the gas prizes are going up and Americans are buying less because dollars are not worth that much as it used to be, many countries that exports goods to US have decreased their demand of goods. And this downturn in spending could affect the nation with unstable economy. Every country’s economy is affected by US economy as the United Nation Federal Reserve increases or decreases their interest rates, the foreign exchange value of dollar also goes up and down and as most of the international transaction are done in dollars , so anything happens in US economy will affect the international economy in significant way. Some countries will face the losses if the United States falls into recession.
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|Uploaded Date:||Jun 14,2014|
About The Author
I am economics teacher. I have 4 years exp. in teaching.