The economy of the United States is a mixed market that is highly developed.

Economy

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By nominal GDP, it has the largest economy in the world, and by purchasing power parity (PPP), it is second only to China in size. As of 2022, its nominal per capita GDP ranks seventh globally and its PPP per capita GDP ranks eighth. In nominal terms, the U.S. contributed about 24.7% of the world GDP in 2022 and 15.5% of it in PPP terms.

Its businesses, particularly in computer, pharmaceutical, medical, aerospace, and military equipment, are at the forefront of technical advancements or are very close to it. The U.S. dollar, which is supported by the country’s sizable economy, stable government, abundant natural resources, highly developed military, role as the reference standard for the petrodollar system, linked eurodollar, and sizable U.S. treasuries market, is the currency of record used in international transactions and the most important reserve currency in the world.

It is the de facto currency in certain nations and the official currency in others. China, the European Union, Canada, Mexico, Mexico, India, Japan, South Korea, the United Kingdom, and Taiwan are the top trading partners of the United States. The United States is the second-largest exporter and the top importer in the world. It has free trade agreements in place or under discussion with a number of nations, including the USMCA, Australia, South Korea, Switzerland, Israel, and others.

Natural resources in large quantities, a sophisticated infrastructure, and high productivity drive the economy of the country. Despite varying estimations from different sources, it has the second-highest overall estimated value of natural resources, valued at US$ 44.98 trillion in 2019. Among OECD member states, Americans have the highest average household and employee income. Although they had the fourth-highest median household income in 2010, their position dropped to sixth in 2013.

During the Great Recession, which is considered to have lasted from December 2007 to June 2009, the American economy had a significant decline. But by 2011, household net worth, non-farm payroll jobs, and the unemployment rate had all returned to levels seen prior to the crisis (late 2007). Following those dates, each of these factors continued to reach post-recession records, and by April 2018, the U.S. recovery was the second-longest on record. In 2017, the United States had the largest income disparity among the 156 countries, placing 41st overall.

18th Century and the Colonial Era:

British colonisation along the Eastern Seaboard in the 17th and 18th centuries marked the start of the United States’ economic history. After 1700, immigration into America increased quickly, and both imports and exports increased along with it. The colonies’ trade was influenced by Africa, Asia, and most frequently Europe. Late in the 18th century, these 13 colonies won their freedom from the British Empire, and they quickly transitioned from colonial to agricultural economies.

19th Century:

In 180 years, the U.S. economy expanded to become a sizable, integrated, and industrialised one that accounted for roughly one-fifth of the global economy. As a result, the United States’ GDP per capita caught up with and then surpassed that of the British Empire and other nations that it had previously lagged behind economically. The economy kept salaries high, luring millions of immigrants from all over the world.  In the 1820s and 1830s, factories displaced craftspeople in favour of mass production. Patents were tightened by new government regulations.

Financial crises and recessions commonly occurred at the same time in the 19th century. After the Panic of 1837, there was a five-year downturn marked by bank failures and historically high unemployment rates. It is challenging to compare the severity of current recessions to earlier recessions due to the enormous changes in the economy over time. Although the causes of this are unknown, it appears that recessions following World War II were less severe than those that preceded them.

20th Century:

New discoveries and advancements of earlier discoveries led to an improvement in the standard of living for American consumers at the turn of the century. By utilising economies of scale and improved communication to manage countrywide operations, many businesses came to be very large. Concentration in these industries sparked worries that monopolies would lead to higher prices and poorer output, yet many of these firms were lowering costs so quickly that the trends in these industries were toward lower prices and increased output. These enormous corporations, which frequently gave the highest earnings in the world, shared the success with a great number of employees. Since the 1970s, a number of developing nations have started to reduce the economic gap with the US. This has typically been the result of shifting the production of commodities that were previously created in the United States to nations where they could be made for sufficiently less money to pay the cost of shipping plus a bigger profit. In other instances, certain nations have gradually mastered the ability to create the same goods and services that were before only available from the United States and a select few other nations. The United States’ real income growth has stalled.

21st Century:

The United States economy entered a recession in 2001, and the return of jobs was particularly sluggish. The number of jobs did not reach its pre-crisis level until January 2005. The construction of a property bubble and perhaps a larger debt bubble coincided with this “jobless recovery,” as the ratio of household debt to GDP increased from a record level of 70% in Q1 2001 to 99% in Q1 2008. In order to finance their consumption, homeowners borrowed against their inflated properties, which increased their debt levels and gave the GDP an unsustainable boost. In the completely unregulated non-depository banking industry, which had surpassed the conventional, regulated depository banking system, a bank run resulted from the value of assets backed by mortgages plummeting drastically as home prices started to collapse in 2006. The financial crisis that affected many mortgage businesses and other non-depository banks (such as investment banks) in 2007 and 2008 reached its height in September 2008 with the collapse of Lehman Brothers and the subsequent bailouts of numerous other financial organisations.

Based on unemployment numbers, CNN stated in May 2020 that the US economy was possibly at its lowest point since the 1930s. By May 8, the US had a record-high unemployment rate of 14.7% after losing 20.5 million jobs in April. Jerome Powell, the chairman of the US Federal Reserve, issued a warning, stating that it might be “an extended time” before the US economy fully recovers from the pandemic’s slow economic growth and that the country should prepare for “low productivity growth and stagnant incomes” in the near future. More than 40 million Americans had applied for jobless benefits as of May 31, 2020.

GDP:

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In 2017, the U.S. nominal GDP was $19.5 trillion. In Q1 2018, annualised nominal GDP surpassed $20 trillion for the first time ($20.1 trillion). Personal consumption makes up roughly 70% of the U.S. GDP, followed by corporate investment at 18%, government spending at 17% (federal, state, and local, excluding transfer payments like Social Security, which are in consumption), and net exports at a negative 3% level because of the trade deficit. Real GDP, which measures both output and income, increased by 2.3% in 2017 as opposed to 1.5% in 2016 and 2.9% in 2015.

Real GDP increased at quarterly annualised rates of 2.2% in Q1 2018, 4.2% in Q2, 3.4% in Q3, and 2.2% in Q4 2018, the best growth rates since Q3 2014, and the 2.9% annual GDP growth in 2018 was the strongest showing of the economy in ten years. The COVID-19 pandemic has caused a decline in the GDP’s growth rate in 2020, causing it to contract at a quarterized annual growth rate of 5.0% in Q1 2020 and 32.9% in Q2 2020, respectively.

China overtook the United States as the largest economy in terms of GDP, calculated at purchasing power parity conversion rates, as of 2014. Prior to that date, the U.S. had the greatest economy; nevertheless, over the subsequent 40 years, China’s growth rate has more than treble that of the United States. In total, the GDP of the European Union was almost 5% greater than that of the United States as of 2017.

 

Employment:

The U.S. work force was roughly 160.4 million people in 2017, making it the fourth largest in the world after China, India, and the European Union. 22 million people worked for the federal, state, and local governments in 2010. 37% of American workers are employed by small enterprises, which are the biggest employer in the country. Large enterprises account for the second-highest percentage of employment, employing 36% of the American workforce. By 2022, 44% of the workforce will be made up of white collar workers, up from 34% in 2000.

85% of working Americans are employed by the country’s private sector. One in four American workers work for the government. Small businesses make up over 99% of all private employers in the United States. 64% of newly created jobs in the U.S. are created by the 30 million small enterprises there (those created minus those lost). 70% of new jobs during the past ten years have been in small firms.

As some small businesses grow to be large enterprises and slightly over half of small firms last for more than five years, the proportion of Americans employed by small businesses vs large businesses has stayed largely the same year after year. Among huge corporations, American firms are among the biggest in the world and among the largest employers. One of them is Walmart, which is both the biggest business and the biggest employer in the private sector worldwide. In the United States alone, Walmart has 1.4 million employees out of its 2.1 million worldwide.

Unemployment:

In the United States, the unemployment rate stood at 4.1%, or 6.6 million people, as of December 2017. The part-time underemployed are included in the government’s larger U-6 unemployment rate, which was 8.1% or 8.2 million persons. These numbers were generated using an estimated civilian labour force of 160.6 million people in relation to an estimated 327 million Americans.

After the Great Recession, the issue of jobless recoveries caused unprecedented levels of long-term unemployment between 2009 and 2010. As of January 2010, more than six million people had been seeking for work for more than six months. Older workers were disproportionately impacted by this. Immigrants gained 656,000 jobs in the U.S. a year after the recession ended in June 2009, whereas native-born employees lost more than a million jobs as a result of the ageing population (relatively more white retirees) and demographic changes.

The government’s U-6 unemployment rate was 17.1% in April 2010, while the official unemployment rate was 9.9%. People who work part-time for financial reasons (i.e., those who would prefer to work full-time) grew by 4.0 million to 8.8 million between February 2008 and February 2010, or by 83%, during the course of the two years.

Even if the unemployment rate had dropped below 8% by 2013, the record number of long-term unemployed people and steadily declining household income continued to point to a jobless recovery. However, as the economy rebounded, the number of payroll jobs reached its pre-recession level (November 2007) by May 2014.

Income Measures:

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Real median household income, which is adjusted for inflation and is a reliable indicator of middle-class income, reached a record high of $59,039 in 2016. It was just marginally higher than the previous high, which was established in 1998, suggesting that for the majority of the last 20 years, the purchasing power of middle-class family income has been flat or declining. 2013 saw $8.969 trillion in employee remuneration and $2.781 trillion in gross private investment.

In the OECD, Americans had the highest average family income, and in 2010, their median household income fell to fourth place from second place in 2007. According to one research, whereas several other advanced economies have recently repaired the gap, middle-class earnings in the United States tied those in Canada in 2010 and may have gone behind by 2014.

Natural resources in large quantities, a sophisticated infrastructure, and high productivity drive the economy of the country. Despite varying estimations from different sources, it has the second-highest overall estimated value of natural resources, valued at US$ 44.98 trillion in 2019. Among OECD member states, Americans have the highest average household and employee income. Although they had the fourth-highest median household income in 2010, their position dropped to sixth in 2013.

During the Great Recession, which is considered to have lasted from December 2007 to June 2009, the American economy had a significant decline. But by 2011, household net worth, non-farm payroll jobs, and the unemployment rate had all returned to levels seen prior to the crisis (late 2007). Following those dates, each of these factors continued to reach post-recession records, and by April 2018, the U.S. recovery was the second-longest on record. In 2017, the United States had the largest income disparity among the 156 countries, placing 41st overall.