Index After the Great Depression Overview Education Employment Income and wealth Financial position Sectors Energy Agriculture Manufacturing Finance International trade Economic predictions and forecasting Currency and central bank Government involvement Regulations Taxation Expenditure
SYNOPSIS Economy Of The United StatesSubmitted to: Submitted by:Ms. ShwetaMighlaniSahilNarulaKritiSangarPankajKapoor
OverviewUnited States Is Home To 29.6 Million SmallBusinesses,30% Of The Worlds Millionaires,40% Of The Worlds Billionaires, As Well As 139Of The Worlds 500 Largest Companies.United States Has Been The Birthplace Of 161Of Britannicas 321 Great Inventions, IncludingItems Such As The Airplane, Internet, Microchip,Laser, Cellphone, Refrigerator, Email,Microwave, LCD And LED Technology, AirConditioning, Assembly Line, Supermarket, BarCode, Electric Motor, And ATM.
United States Is Rich In Mineral Resources AndFertile Farm Soil, And It Is Fortunate To Have AModerate Climate.High Wages Brings Many Highly Skilled WorkersFrom Around The World To The United States.Over 13 Million People Entered The UnitedStates During The 1990s Alone.The Corporation Has Emerged As An AssociationOf Owners, Known As Stockholders, Who FormA Business Enterprise Governed By A ComplexSet Of Rules And Customs.
EmploymentThere are approximately 154.4 million employedindividuals in the US.There are approximately 154.4 million employedindividuals in the US.Small businesses are the largestemployer in the country representing 53% of US workers.The second largest share of employment belongs to largebusinesses, who employ a total of 38% of the USworkforce. A total of 91% of Americans are employed bythe private sector. Government accounts for 8% of all USworkers.The 30 million small businesses in the USA account for 64%of net new jobs (jobs created minus jobs lost).70% of jobs created in the last decade were by smallbusiness.Amongst large businesses, several of the largestcompanies and employers in the world are Americancompanies. Amongst them are Walmart, the largestcompany and the largest private sector employer in theworld, which employs 2.1 million people world-wide and1.4 million in the US alone.
Approximately 6.5 million of businesses in the US are owned by women, Government 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 economic activity. State governments, 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 $8.97 trillion, which is approximately 68% of GDP. Congress has used this method to deal with an encroaching debt ceiling in previous years, as the federal borrowing limit was raised in 2002 and 2003. As of October 4, 2008, the "Emergency Economic Stabilization Act of 2008" raised the current debt ceiling to US$ 11.3 trillion. The federal governments debt rose by almost $1.4 trillion in 2009, and now stands at $12.1 trillion. While the U.S. public debt is the worlds largest in absolute size, another measure is its size relative to the nations GDP. As of 2009 the debt was 83 percent of GDP. This debt, as a percent of GDP, is still less than the debt of Japan (192%) (the overwhelming number of owners of JGBs are Japanese) and roughly equivalent to those of a few western European nations, including Greece. INCOME AND WEALTH
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 2004 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. Between June 2007 and November 2008, Americans lost an estimated average of more than a quarter of their collective net worth. Since peaking in the second quarter of 2007, household wealth is down $14 trillion. The Fed also said that at the end of 2008, the debt owed by nonfinancial sectors was $33.5 trillion, including household debt valued at $13.8 trillion. FINANCIAL POSITION Components of total US debt as a fraction of GDP 1945-2009Main article: Financial position of the United States 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 the United States. As of the first quarter of 2010, domestic financial assets totaled $131 trillion and domestic financial liabilities $106 trillion. Tangible assets in 2008 (such as real estate and equipment) for selected sectorsB totaled an additional $56.3 trillion Sectors Energy Sales and employees by sectors of the United States economy in 2002. Energy Main article: Energy in the United States The United States is the largest energy consumer in terms of total use, using 100 quadrillion BTUs in 2005. The U.S. ranks seventh in energy consumption per-capita after Canada and a number of other countries. The majority of this energy is derived from fossil fuels: in 2005, it was estimated that 40% of the nations energy came from petroleum, 23% from coal, and 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.
American dependence on oil imports grew from 24% in 1970 to 65% by the end of 2005. 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. Transportation 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. Agriculture Main article: Agriculture in the United States See also: Fishing industry in the United States, Beekeeping in the United States, and United States Department of Agriculture Agriculture is a major industry in the United States and the country is a net exporter of food. With vast tracts of temperate arable land, technologically advanced agribusiness, and agricultural subsidies, the United States controls almost half of world grain exports.Products include wheat, corn, other grains, fruits, vegetables, cotton; beef, pork, poultry, dairy products;forest products; fish. Manufacturing Main article: Manufacturing in the United States The United States is the worlds largest manufacturer, with a 2007 industrial output of US$2.69 trillion. In 2008, its manufacturing output was greater than that of the manufacturing output of China, India, and Brazil combined, despite manufacturing being a very small portion of the entire US economy as compared to most other countries. A large portion of US industrial output, the US leads the world in airplane manufacturing. American companies such as Boeing, Cessna (see: Textron), Lockheed Martin (see: Skunk Works), and General Dynamics produce a vast majority of the worlds civilian and military aircraft in factories stretching across the United States. Main industries include petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, and mining. A total of 3.2 million – one in six U.S. factory jobs – have disappeared since the start of 2000. The manufacturing sector of the U.S. economy has experienced substantial job losses over the past several years. In January 2004, the number of such jobs stood at 14.3 million, down by 3.0 million jobs, or 17.5 percent, since July 2000 and about 5.2 million since the historical peak in 1979. Employment in manufacturing was its lowest since July 1950.
The U.S. produces approximately 21% of the worlds manufacturing output, a number which hasremained unchanged for the last 40 years. The job loss during this continual volume growth isexplained by record breaking productivity gains. In addition, growth in telecommunications,pharmaceuticals, aircraft, heavy machinery and other industries along with declines in low end,low skill industries such as clothing, toys, and other simple manufacturing have resulted in U.S.jobs being more highly skilled and better paying.FinanceMain articles: Finance in the United States, Banking in the United States, and Insurance in theUnited StatesThe New York Stock Exchange is the largest stock exchange in the world by value of its listedcompanies securities, measuring more than 3 times larger than any other stock exchange in theworld. As of October 2008, the combined capitalization of all domestic NYSE listed companieswas US$10.1 trillion. New York City is the financial capital of the United States, and also of theworld alongside London.NASDAQ is another American stock exchange. It is the worlds 3rd largest stock exchange, onlyafter the New York Stock Exchange and Japans Tokyo Stock Exchange, though NASDAQs tradevalue is much larger than that of Japans. It is the largest electronic screen-based equitysecurities trading market in the United States. With approximately 3,800 companies andcorporations, it has more trading volume per hour than any other stock exchange in the world.International tradeMain articles: Foreign trade of the United States and Trade policy of the United StatesThe United States is the worlds largest trading nation. Since it is the worlds leading importer,there are many 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 gold and petroleum(the latter sometimes called petrocurrency is the source of the term petrodollar). Large foreigneconomies such as China, Japan, Arab League, and the EU own huge dollar reserves (especiallyas the US is more in debt) so there is a fear that they will move away from the dollar. Chinasreserves are more than $2 trillion, the worlds largest. China owns an estimated $1.6 trillion ofU.S. securities.In 2008, the total U.S. trade deficit was $695.9 billion, which is $1.8 trillion in exports minus $2.5trillion in imports. The deficit on petroleum products was $386.3 billion. The trade deficit withChina was $266.3 billion, a new record and up from $304 million in 1983. The United States hada $144.1 billion surplus on trade in services, and $821.2 billion deficit on trade in goods in 2008.
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 growingpercent of buyers are international. Economic predictions and forecastingPredictions about the direction of the United States economy in the short term and long termare crucial factors in determining federal government policies, business decisions, and FederalReserve decisions. Several institutions make economic predictions, including: Global Insight, andthe UCLA Anderson Forecast. Various state agencies, including the California Department ofFinance, also make predictions. Currency and central bankMain articles: United States dollar and Federal Reserve SystemUnited States historical inflation rate 1666–2004The United States dollar is the unit of currencyof the United States. 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 currency.The federal government attempts to use both monetary policy (control of the money supplythrough mechanisms such as changes in interest rates) and fiscal policy (taxes and spending) tomaintain low inflation, high economic growth, and low unemployment. A relatively privatecentral bank, known as the Federal Reserve, was formed in 1913 to provide a stable currencyand monetary policy. Despite significant loss of value due to inflation, the U.S. dollar has beenregarded as one of the more stable currencies in the world and many nations back their owncurrency with U.S. dollar reserves.The U.S. dollar has maintained its position as the worlds primary reserve currency, although it isgradually being challenged in that role. Almost two-thirds of currency reserves held around theworld are held in US dollars, compared to around 25% for the next most popular currency, theEuro. Rising US national debt and the related rise of China have led to some, especially theChinese, to call for replacing the dollar as the worlds reserved currency, but thus far this hasbeen only speculation.The dollar used gold standard and/or silver standard from 1785 until 1975, when it became afiat currency. As gold tends to retain its value over long historical time periods, gold-backedcurrencies are generally much more stable over time than fiat currencies, and this is reflected inthe decline of the value of the US dollar as the currency has become unbacked by Gold.GOVERNMENT INVOLVEMENT
RegulationsThe U.S. federal government regulates private enterprise in numerous ways. Regulation fallsinto two general categories.Some efforts seek, either directly or indirectly, to control prices. Traditionally, the governmenthas sought to prevent monopolies such as electric utilities from raising prices beyond the levelthat would ensure them extremely large profits. At times, the government has extendedeconomic control to other kinds of industries as well. In the years following the GreatDepression, it devised a complex system to stabilize prices for agricultural goods, which tendto fluctuate wildly in response to rapidly changing supply and demand. A number of otherindustries—trucking and, later, airlines—successfully sought regulation themselves to limitwhat they considered as harmful price cutting, a process called regulatory capture.Another form of economic regulation, antitrust law, seeks to strengthen market forces so thatdirect regulation is unnecessary. The government—and, sometimes, private parties—haveused antitrust law to prohibit practices or mergers that would unduly limit competition.Bank regulation in the United States is highly fragmented compared to other G10 countrieswhere most countries have only one bank regulator. In the U.S., banking is regulated at boththe federal and state level. The U.S also has one of the most highly regulated bankingenvironments in the world; however, many of the regulations are not safety and soundnessrelated, but are instead focused on privacy, disclosure, fraud prevention, anti-moneylaundering, anti-terrorism, anti-usury lending, and promoting lending to lower-incomesegments.Since the 1970s, government has also exercised control over private companies to achievesocial goals, such as improving the publics health and safety or maintaining a healthyenvironment. For example, the Occupational Safety and Health Administration provides andenforces standards for workplace safety, and the United States Environmental ProtectionAgency provides standards and regulations to maintain air, water, and land resources. TheU.S. Food and Drug Administration regulates what drugs may reach the market, and alsoprovides standards of disclosure for food products.American attitudes about regulation changed substantially during the final three decades ofthe 20th century. Beginning in the 1970s, policy makers grew increasingly convinced thateconomic regulation protected companies at the expense of consumers in industries such asairlines and trucking. At the same time, technological changes spawned new competitors insome industries, such as telecommunications, that once were considered natural monopolies.Both developments led to a succession of laws easing regulation.While leaders of Americas two most influential political parties generally favored economicderegulation during the 1970s, 1980s, and 1990s, there was less agreement concerningregulations 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 1960sand 1970s. During the 1980s, the government relaxed labor, consumer and environmentalrules based on the idea that such regulation interfered with free enterprise, increased thecosts of doing business, and thus contributed to inflation. The response to such changes ismixed; many Americans continued to voice concerns about specific events or trends,prompting the government to issue new regulations in some areas, including environmentalprotection.Where legislative channels have been unresponsive, some citizens have turned to the courtsto address social issues more quickly. For instance, in the 1990s, individuals, and eventuallythe government itself, sued tobacco companies over the health risks of cigarette smoking. The1998 Tobacco Master Settlement Agreement provided states with long-term payments tocover medical costs to treat smoking-related illnesses. TaxationMain article: Taxation in the United StatesTaxation in the United States is a complex system which may involve payment to at least fourdifferent levels of government and many methods of taxation. Taxes are levied by the federalgovernment, by the state governments, and often by local governments, which may includecounties, municipalities, township, school districts, and other special-purpose districts, whichinclude fire, utility, and transit districts.The National Bureau of Economic Research has concluded that the combined federal, state, andlocal government average marginal tax rate for most workers to be about 40% of income. TheTax Foundation concluded that government at all levels will collect 30.8% of the nations incomefor 2008.Tax Day, the day by which tax returns are due, is usually April 15. ExpenditureMain articles: United States federal budget and United States public debtFiscal Year 2009 U.S. Federal Spending - Cash or Budget Basis.Fiscal Year 2009 U.S. Federal Receipts.The United States public sector spending amounts toabout 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 newproducts, conducts space exploration, and runs numerous programs designed to help workersdevelop 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 economicactivity.State governments, meanwhile, are responsible for the construction and maintenance of mosthighways. State, county, or city governments play the leading role in financing and operatingpublic schools. Local governments are primarily responsible for police and fire protection.Overall, federal, state, and local spending accounted for almost 28% of gross domestic productin 1998.As of January 20, 2009, the total U.S. federal debt was $10.627 trillion (an increase of 85.5percent over the previous eight years). The borrowing cap debt ceiling as of 2005 stood at $8.18trillion.In March 2006, Congress raised that ceiling an additional $0.79 trillion to $8.97 trillion,which is approximately 68% of GDP. Congress has used this method to deal with anencroaching debt ceiling in previous years, as the federal borrowing limit was raised in 2002 and2003. As of October 4, 2008, the "Emergency Economic Stabilization Act of 2008" raisedthe current debt ceiling to US$ 11.3 trillion.The federal governments debt rose by almost $1.4 trillion in 2009, and now stands at $12.1trillion.While the U.S. public debt is the worlds largest in absolute size, another measure is itssize relative to the nations GDP. As of 2009 the debt was 83 percent of GDP. This debt, as apercent of GDP, is still less than the debt of Japan (192%) (the overwhelming number of ownersof JGBs are Japanese) and roughly equivalent to those of a few western European nations,including Greece.