Economy of the United States

Economy of the United States

Overview
Throughout this article, the unqualified term "dollar" and the $ symbol refer to the US dollar.


The economy of the United States is the world's largest national economy. Its nominal GDP was estimated to be nearly $14.5 trillion in 2010, approximately a quarter of nominal global GDP.
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Encyclopedia
Throughout this article, the unqualified term "dollar" and the $ symbol refer to the US dollar.


The economy of the United States is the world's largest national economy. Its nominal GDP was estimated to be nearly $14.5 trillion in 2010, approximately a quarter of nominal global GDP. The European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

 has a larger collective economy, but is not a single nation. Its GDP at purchasing power parity
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...

 was also the largest in the world, approximately a fifth of global GDP at purchasing power parity. The U.S. economy also maintains a very high level of output
Output (economics)
Output in economics is the "quantity of goods or services produced in a given time period, by a firm, industry, or country," whether consumed or used for further production.The concept of national output is absolutely essential in the field of macroeconomics...

 per capita. In 2010, it was estimated to have a per capita GDP (PPP) of $46,844, the 7th highest in the world. The U.S is the largest trading nation in the world. Its three largest trading partners as of 2010 are Canada, China and Mexico.

The economy of the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 is a mixed economy
Mixed economy
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. Most mixed economies can be described as market economies with strong regulatory oversight, in addition to having a variety...

 and has maintained a stable overall GDP growth rate, a moderate unemployment rate, and high levels of research and capital investment. It has been the world's largest national economy (not including colonial empires) since at least the 1890s
History of the United States (1865–1918)
The History of the United States covers Reconstruction, the Gilded Age, and the Progressive Era, and includes the rise of industrialization and the resulting surge of immigration in the United States. This period of rapid economic growth and soaring prosperity in North and West saw the U.S...

. It was also the world's largest economic entity between 1941 and 2004 (before 1941 : British colonial empire ; after 2004 : European Union). Most of the economy is classified as services. The country remains the world's largest manufacturer, representing a fifth of the global manufacturing output. The United States is home to 139 of the world's 500 largest companies, which is almost twice that of any other country. About 60% the global currency reserves has been invested in the United States dollar and only 24% in euro. The country is one of the world's largest and most influential financial market
Financial market
In economics, a financial market is a mechanism that allows people and entities to buy and sell financial securities , commodities , and other fungible items of value at low transaction costs and at prices that reflect supply and demand.Both general markets and...

s.
Foreign investments
Foreign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...

 made in the United States total almost $2.4 trillion, which is more than twice that of any other country. American investments in foreign countries
Foreign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...

 total over $3.3 trillion, which is almost twice that of any other country. Total public and private debt was $50.2 trillion at the end of the first quarter of 2010, or 3.5 times GDP. The proportion of public debt
United States public debt
The United States public debt is the money borrowed by the federal government of the United States at any one time through the issue of securities by the Treasury and other federal government agencies...

 was about 0.9 times the GDP. Domestic financial asset
Asset
In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset...

s totaled $131 trillion and domestic financial liabilities totaled $106 trillion.
As of 2010, the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

 as a whole was the largest trading partner of the U.S., whereas Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

, China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...

, and Mexico
Mexico
The United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...

 were the largest individual trading nations.

The labor market in the United States has attracted immigrants from all over the world
Immigration to the United States
Immigration to the United States has been a major source of population growth and cultural change throughout much of the history of the United States. The economic, social, and political aspects of immigration have caused controversy regarding ethnicity, economic benefits, jobs for non-immigrants,...

 and its net migration rate is among the highest in the world. The United States is one of the top-performing economies in studies such as the Ease of Doing Business Index
Ease of Doing Business Index
The Ease of Doing Business Index is an index created by the World Bank. Higher rankings indicate better, usually simpler, regulations for businesses and stronger protections of property rights...

, the Global Competitiveness Report
Global Competitiveness Report
The Global Competitiveness Report is a yearly report published by the World Economic Forum. The first report was released in 1979. The 2011–2012 report covers 142 major and emerging economies....

, and others.

Early development


The economic history of the United States has its 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 America. In 180 years the United States grew to a huge, integrated, industrialized economy that still makes up over a quarter of the world economy
World economy
The world economy, or global economy, generally refers to the economy, which is based on economies of all of the world's countries, national economies. Also global economy can be seen as the economy of global society and national economies – as economies of local societies, making the global one....

. 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), a cultural landscape that valued entrepreneurship, a commitment to investing in material and human capital, and at times a willingness to exploit labor. In addition, the U.S. was able to utilize these resources due to a unique set of institutions designed to encourage utilization and extraction. As a result, the U.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 economy has maintained high wages, attracting immigrants by the millions from all over the world.

In the 19th century, recessions frequently coincided with financial crises.

The Panic of 1837
Panic of 1837
The Panic of 1837 was a financial crisis or market correction in the United States built on a speculative fever. The end of the Second Bank of the United States had produced a period of runaway inflation, but on May 10, 1837 in New York City, every bank began to accept payment only in specie ,...

 was followed by a five-year depression, with the failure of banks and then-record-high unemployment levels. Because of the great changes in the economy over the centuries, it is difficult to compare the severity of modern recessions to early recessions. Recessions after World War II appear to have been less severe than earlier recessions, but the reasons for this are unclear. The Depression of 1893 was one of the worst in American history, with the unemployment rate exceeding 10% for half a decade.

Since the Great Depression


For many years following the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...

 of the 1930s, when danger of recession
Recession
In economics, a recession is a business cycle contraction, a general slowdown in economic activity. During recessions, many macroeconomic indicators vary in a similar way...

 appeared most serious, the 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. Ideas about the best tools for stabilizing the economy changed substantially between the 1930s and the 1980s. From the New Deal
New Deal
The New Deal was a series of economic programs implemented in the United States between 1933 and 1936. They were passed by the U.S. Congress during the first term of President Franklin D. Roosevelt. The programs were Roosevelt's responses to the Great Depression, and focused on what historians call...

 era that began in 1933, to the Great Society
Great Society
The Great Society was a set of domestic programs in the United States promoted by President Lyndon B. Johnson and fellow Democrats in Congress in the 1960s. Two main goals of the Great Society social reforms were the elimination of poverty and racial injustice...

 initiatives of the 1960s, national policy makers relied principally on fiscal policy
Fiscal policy
In economics and political science, fiscal policy is the use of government expenditure and revenue collection to influence the economy....

 to influence the economy. The approach, advanced by British economist John Maynard Keynes
John Maynard Keynes
John Maynard Keynes, Baron Keynes of Tilton, CB FBA , was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, as well as the economic policies of governments...

, gave elected officials a leading role in directing the economy, since spending and taxes are controlled by the U.S. President
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....

 and the Congress. The economy and living standards grew strongly during this era, but a period of high inflation, interest rates and unemployment after 1973 weakened confidence in fiscal policy as a tool for regulating the overall pace of economic activity.
Following a series of periodic credit tightening measures designed to combat inflation, a combination of loose monetary policy
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...

 and record budget deficits, both financed with foreign direct investment
Foreign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...

 and public debt, became routine economic policy after 1981.

The U.S. economy grew by an average of 3.8% from 1946 to 1973, while real median household income surged 55% (or 1.6% a year). The economy since 1973, however, has been characterized by both slower growth (averaging 2.7%), and nearly stagnant living standards, with household incomes increasing by 10%, or only 0.3% annually. The worst recession in recent decades, in terms of lost output, occurred during the 2008 financial crisis, when GDP fell by 5.0% from the spring of 2008 to the spring of 2009. Other significant recessions took place in 1957–58, when GDP fell 3.7%, following the 1973 oil crisis
1973 oil crisis
The 1973 oil crisis started in October 1973, when the members of Organization of Arab Petroleum Exporting Countries or the OAPEC proclaimed an oil embargo. This was "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war. It lasted until March 1974. With the...

, with a 3.1% fall from late 1973 to early 1975, and in the 1981–82 recession, when GDP dropped by 2.9%. Recent, mild recessions have included the 1990–91 downturn, when output fell by 1.3%, and the 2001 recession, in which GDP slid by 0.3%; the 2001 downturn lasted just eight months. 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% a year), from mid 1991 to late in 2000, at 43% (3.8% a year), and from late 1982 to mid 1990, at 37% (4% a year).

Since 1976, the US has sustained trade deficits with other nations, and since 1982, current account deficits; the nation's long-standing surplus in its trade in services
Trade in services
Trade in Services refers to the sale and delivery of an intangible product, called a service, between a producer and consumer. Trade in services takes place between a producer and consumer that are, in legal terms, based in different countries, or economies, this is called International Trade in...

 was maintained, however, and reached US$140 billion yearly in 2008 and 2009. In recent years, the primary economic concerns have centered on: high household debt ($11 trillion, including $2.5 trillion in revolving debt), high net national debt ($9 trillion), high corporate debt ($9 trillion), high mortgage debt (over $15 trillion as of 2005 year-end), high unfunded Medicare liability ($30 trillion), high unfunded Social Security liability ($12 trillion), high external debt
External debt
External debt is that part of the total debt in a country that is owed to creditors outside the country. The debtors can be the government, corporations or private households. The debt includes money owed to private commercial banks, other governments, or international financial institutions such...

 (amount owed to foreign lenders), high trade deficits, a serious deterioration in the United States net international investment position
Net international investment position
The difference between a country's external financial assets and its liabilities is the net international investment position . Both public and private held external assets and liabilities by legal residents of the respective country are hereby taken into account...

 (NIIP) (−24% of GDP), and high unemployment. In 2006, the U.S economy had its lowest saving rate since 1933. These issues have raised concerns among economists and national politicians.

The United States economy experienced a crisis in 2008 led by a derivatives market
Derivatives market
The derivatives market is the financial market for derivatives, financial instruments like futures contracts or options, which are derived from other forms of assets....

 and subprime mortgage crisis
Subprime mortgage crisis
The U.S. subprime mortgage crisis was one of the first indicators of the late-2000s financial crisis, characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages....

, and a declining dollar value. On December 1, 2008, the NBER
National Bureau of Economic Research
The National Bureau of Economic Research is an American private nonprofit research organization "committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community." The NBER is well known for providing start and end...

 declared that the United States entered a recession
Late 2000s recession
The late-2000s recession, sometimes referred to as the Great Recession or Lesser Depression or Long Recession, is a severe ongoing global economic problem that began in December 2007 and took a particularly sharp downward turn in September 2008. The Great Recession has affected the entire world...

 in December 2007, citing employment and production figures as well as the third quarter decline in GDP. The recession did, however, lead to a reduction in record trade deficits, which fell from $840 billion annually during the 2006–08 period, to $500 billion in 2009, as well as to higher personal 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 in 2010; savings rates, however, remained at around 5%.

In 1980, the U.S. public debt was $909 billion – or an amount equal to 33.3% of America's gross domestic product (GDP). By 1990, that number had more than tripled to $3.2 trillion – or 55.9% of GDP. In 2001 the national debt was $5.7 trillion; however, the debt-to-GDP ratio remained at 1990 levels. Debt levels rose quickly in the following decade, and on January 28, 2010, the US debt ceiling was raised to $14.3 trillion dollars. Based on the 2010 U.S. budget
United States federal budget
The Budget of the United States Government is the President's proposal to the U.S. Congress which recommends funding levels for the next fiscal year, beginning October 1. Congressional decisions are governed by rules and legislation regarding the federal budget process...

, total national debt will grow to nearly 100% of GDP, versus a level of approximately 80% in early 2009. The White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion in 2009.

The U.S. Treasury statistics indicate that, at the end of 2006, non-US citizens and institutions held 44% of federal debt held by the public. China, holding $801.5 billion in treasury bonds, is the largest foreign financier of the record U.S. public debt.

US share of world GDP (nominal) peaked in 1985 with 32.74% of global GDP (nominal). The second highest share was 32.24% in 2001.

US share of world GDP (PPP) peaked in 1999 with 23.78% of global GDP (PPP). The share has been declining each year since .]

Overview



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. Today, the United States is home to 29.6 million small businesses, 30% of the world's millionaires, 40% of the world's billionaires, as well as 139 of the world's 500 largest companies. From its emergence as an independent nation, the United States has encouraged science and innovation. As a result, the United States has been the birthplace of 161 of Britannica's 321 Great Inventions, including items such as the airplane, internet, microchip
Integrated circuit
An integrated circuit or monolithic integrated circuit is an electronic circuit manufactured by the patterned diffusion of trace elements into the surface of a thin substrate of semiconductor material...

, laser
Laser
A laser is a device that emits light through a process of optical amplification based on the stimulated emission of photons. The term "laser" originated as an acronym for Light Amplification by Stimulated Emission of Radiation...

, cellphone, refrigerator
Refrigerator
A refrigerator is a common household appliance that consists of a thermally insulated compartment and a heat pump that transfers heat from the inside of the fridge to its external environment so that the inside of the fridge is cooled to a temperature below the ambient temperature of the room...

, email, microwave
Microwave oven
A microwave oven is a kitchen appliance that heats food by dielectric heating, using microwave radiation to heat polarized molecules within the food...

, LCD
Liquid crystal display
A liquid crystal display is a flat panel display, electronic visual display, or video display that uses the light modulating properties of liquid crystals . LCs do not emit light directly....

 and LED
Light-emitting diode
A light-emitting diode is a semiconductor light source. LEDs are used as indicator lamps in many devices and are increasingly used for other lighting...

 technology, air conditioning
Air conditioning
An air conditioner is a home appliance, system, or mechanism designed to dehumidify and extract heat from an area. The cooling is done using a simple refrigeration cycle...

, assembly line
Assembly line
An assembly line is a manufacturing process in which parts are added to a product in a sequential manner using optimally planned logistics to create a finished product much faster than with handcrafting-type methods...

, supermarket, bar code, electric motor
Electric motor
An electric motor converts electrical energy into mechanical energy.Most electric motors operate through the interaction of magnetic fields and current-carrying conductors to generate force...

, and ATM
Automated teller machine
An automated teller machine or automatic teller machine, also known as a Cashpoint , cash machine or sometimes a hole in the wall in British English, is a computerised telecommunications device that provides the clients of a financial institution with access to financial transactions in a public...

.

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
Atlantic Ocean
The Atlantic Ocean is the second-largest of the world's oceanic divisions. With a total area of about , it covers approximately 20% of the Earth's surface and about 26% of its water surface area...

 and Pacific Oceans, as well as on the Gulf of Mexico
Gulf of Mexico
The Gulf of Mexico is a partially landlocked ocean basin largely surrounded by the North American continent and the island of Cuba. It is bounded on the northeast, north and northwest by the Gulf Coast of the United States, on the southwest and south by Mexico, and on the southeast by Cuba. In...

. 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. These 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 late 20th century, many Latin Americans
Latin Americans
Latin Americans are the citizens of the Latin American countries and dependencies. Latin American countries are multi-ethnic, home to people of different ethnic and national backgrounds. As a result, some Latin Americans don't take their nationality as an ethnicity, but identify themselves with...

 immigrated; followed by large numbers of Asians
Asian American
Asian Americans are Americans of Asian descent. The U.S. Census Bureau definition of Asians as "Asian” refers to a person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent, including, for example, Cambodia, China, India, Indonesia, Japan,...

 following removal of nation-origin based immigration quotas. The promise of high wages brings many highly skilled workers from around the world to the United States. Over 13 million people entered the United States during the 1990s alone.

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 farms in the first half of the 20th century, in what was known as the Great Migration
Great Migration (African American)
The Great Migration was the movement of 6 million blacks out of the Southern United States to the Northeast, Midwest, and West from 1910 to 1970. Some historians differentiate between a Great Migration , numbering about 1.6 million migrants, and a Second Great Migration , in which 5 million or more...

.

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
Mass production
Mass production is the production of large amounts of standardized products, including and especially on assembly lines...

, corporations, such as General Electric
General Electric
General Electric Company , or GE, is an American multinational conglomerate corporation incorporated in Schenectady, New York and headquartered in Fairfield, Connecticut, United States...

, have been instrumental in shaping the United States. Through the stock market
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...

, American banks and investors have grown their economy by investing and withdrawing capital from profitable corporations. Today in the era of globalization
Globalization
Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...

, American investors and corporations have influence all over the world. The American government is also 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
Hoover Dam
Hoover Dam, once known as Boulder Dam, is a concrete arch-gravity dam in the Black Canyon of the Colorado River, on the border between the US states of Arizona and Nevada. It was constructed between 1931 and 1936 during the Great Depression and was dedicated on September 30, 1935, by President...

), military-industrial contracts, and the financial industry.

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.

Employment



There are 4,352 colleges, universities, and junior colleges in the United States. 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, two-year degree rate is also among the highest, standing tenth. In 2003 a Supreme Court decision concerning affirmative action
Affirmative action in the United States
In the United States, affirmative action refers to equal opportunity employment measures that Federal contractors and subcontractors are legally required to adopt. These measures are intended to prevent discrimination against employees or applicants for employment, on the basis of "color,...

 in universities allowed educational institutions to consider race as a factor in admitting students.
The labor market in the United States has attracted immigrants from all over the world
Immigration to the United States
Immigration to the United States has been a major source of population growth and cultural change throughout much of the history of the United States. The economic, social, and political aspects of immigration have caused controversy regarding ethnicity, economic benefits, jobs for non-immigrants,...

 and its net migration rate is among the highest in the world.
For example, the brain drain
Brain drain
Human capital flight, more commonly referred to as "brain drain", is the large-scale emigration of a large group of individuals with technical skills or knowledge. The reasons usually include two aspects which respectively come from countries and individuals...

 from Europe to the United States means that some 400,000 European science and technology graduates now live in the U.S. Nearly 14 million immigrants came to the United States from 2000 to 2010. In a 2006 news story, USA Today reported, "The analysis shows that 31% of adult immigrants have not completed high school. A third lack health insurance."
There are approximately 154.4 million employed individuals in the US. Government is the largest employment sector with 22 million. Small businesses are the largest employer in the country representing 53% of US workers. The second largest share of employment belongs to large businesses, who employ a total of 38% of the US workforce. A total of 91% of Americans are employed by the private sector
Private sector
In economics, the private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state...

. Government
Public sector
The public sector, sometimes referred to as the state sector, is a part of the state that deals with either the production, delivery and allocation of goods and services by and for the government or its citizens, whether national, regional or local/municipal.Examples of public sector activity range...

 accounts for 8% of all US workers. Over 99% of all employing organizations in the US are small businesses. 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 small business. The proportion of Americans employed by small business versus large business has remained relatively the same year by year as some small businesses become large businesses and just over half of small businesses survive more than 5 years. Amongst large businesses, several of the largest companies and employers in the world are American companies. Amongst them are Walmart, the largest company and the largest private sector
Private sector
In economics, the private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state...

 employer in the world, which employs 2.1 million people world-wide and 1.4 million in the US alone.

There are nearly 30 million small businesses in the USA. Minorities in the US, such as Hispanics
Hispanic and Latino Americans
Hispanic or Latino Americans are Americans with origins in the Hispanic countries of Latin America or in Spain, and in general all persons in the United States who self-identify as Hispanic or Latino.1990 Census of Population and Housing: A self-designated classification for people whose origins...

, African Americans, Asian Americans, and Native Americans (35% of the country's population), own 4.1 million of the country's businesses. Minority-owned businesses generate almost $700 billion in revenue and employ almost 5 million workers in the US.

The median household income in the US as of 2008 is $52,029. 284,000 working people in the US have two full-time jobs and 7.6 million have a part-time job in addition to their full-time employment. 12% of working individuals in the US belong to a labor union with the majority of labor union members being government workers.

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 worker
Discouraged worker
Not to be confused with Disgruntled worker.In economics, a discouraged worker is a person of legal employment age who is not actively seeking employment or who does not find employment after long-term unemployment...

s) was 15.9%. In 2009 and 2010, following the financial crisis of 2007–2010, the emerging problem of jobless recoveries
Jobless recovery
A jobless recovery or jobless growth is an economic phenomon in which a macroeconomy experiences growth while maintaining or decreasing its level of employment...

 resulted in record levels of long-term unemployment with over 6 million workers looking for work longer than 6 months as of January, 2010. This particularly affected older workers. Since the recession's end in June 2009 in the United States, immigrants have gained 656,000 jobs, while U.S.-born workers lost more than a million jobs.

In April 2010, the official unemployment rate was 9.9%, but the government’s broader U-6 unemployment rate was 17.1%. In the period between February 2008 and February 2010, the number of people working part time for economic reasons has increased by 4 million to 8.8 million, that is a 83% increase in part time workers during the two year period.

Female unemployment continued to be significantly lower than male unemployment (7.5% vs. 9.8%). The unemployment among Caucasians continues to be much lower than African American unemployment (at 8.5% vs. 15.8%). The youth unemployment rate was 18.5% in July 2009, the highest July rate since 1948. 34.5% of young African American men were unemployed in October 2009. Officially, Detroit’s unemployment rate is 27%, but Detroit News suggests that nearly half of this city’s working-age population may be unemployed.

Entrepreneurship


Entrepreneurship
Entrepreneurship
Entrepreneurship is the act of being an entrepreneur, which can be defined as "one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods". This may result in new organizations or may be part of revitalizing mature organizations in response...

 is the act of being an entrepreneur
Entrepreneur
An entrepreneur is an owner or manager of a business enterprise who makes money through risk and initiative.The term was originally a loanword from French and was first defined by the Irish-French economist Richard Cantillon. Entrepreneur in English is a term applied to a person who is willing to...

, which can be defined as "one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods". This may result in new organization
Organization
An organization is a social group which distributes tasks for a collective goal. The word itself is derived from the Greek word organon, itself derived from the better-known word ergon - as we know `organ` - and it means a compartment for a particular job.There are a variety of legal types of...

s or may be part of revitalizing mature organization
Organization
An organization is a social group which distributes tasks for a collective goal. The word itself is derived from the Greek word organon, itself derived from the better-known word ergon - as we know `organ` - and it means a compartment for a particular job.There are a variety of legal types of...

s in response to a perceived opportunity. The most obvious form of entrepreneurship is that of starting new business
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...

es (referred as Startup Company
Startup company
A startup company or startup is a company with a limited operating history. These companies, generally newly created, are in a phase of development and research for markets...

); however, in recent years, the term has been extended to include social and political forms of entrepreneurial activity. When entrepreneurship is describing activities within a firm or large organization it is referred to as intra-preneurship and may include corporate venturing, when large entities spin-off organizations.

According to Paul Reynolds, entrepreneurship scholar and creator of the Global Entrepreneurship Monitor
Global Entrepreneurship Monitor
The Global Entrepreneurship Monitor is a global study conducted by a consortium of universities.Started in 1999, it aims to analyze the level of entrepreneurship occurring in a wide basket of countries...

, "by the time they reach their retirement years, half of 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 a common activity among U.S. workers over the course of their careers." And in recent years has been documented by scholars such as David Audretsch to be a major driver of economic growth in both the United States and Western Europe.

Income and wealth


According to the United States Census Bureau
United States Census Bureau
The United States Census Bureau is the government agency that is responsible for the United States Census. It also gathers other national demographic and economic data...

, the pretax median household income
Median household income
The median household income is commonly used to generate data about geographic areas and divides households into two equal segments with the first half of households earning less than the median household income and the other half earning more...

 in 2007 was $50,233. The median ranged from $68,080 in Maryland
Maryland
Maryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...

 to $36,338 in Mississippi
Mississippi
Mississippi is a U.S. state located in the Southern United States. Jackson is the state capital and largest city. The name of the state derives from the Mississippi River, which flows along its western boundary, whose name comes from the Ojibwe word misi-ziibi...

.

In 2007, the median real annual household income rose 1.3% to $50,233, according to the Census Bureau
United States Census Bureau
The United States Census Bureau is the government agency that is responsible for the United States Census. It also gathers other national demographic and economic data...

. 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 the global recession led to falling asset prices around the world. Assets owned by Americans lost about a quarter of their value. 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.

In 2007, financial analyst Gary Shilling
Gary Shilling
A. Gary Shilling is an American financial analyst and commentator who appears on a regular basis in publications ranging from Forbes Magazine to The New York Times and The Wall Street Journal. He is President of A. Gary Shilling & Co., Inc., and editor of A. Gary Shilling's Insight...

 estimated that 52.6% of all Americans received a significant portion of their income from the federal government.

About 30% of the entire world's millionaire population reside in the United States (in 2009). Furthermore, 34% of the world's billionaires are American (in 2011).

Financial position


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 sectors totaled an additional $56.3 trillion.

Sectors




Retailing



Retailing is a major sector of the economy of the United States; indeed, it is often credited with "leading" the economy. Consumer goods are commonly obtained through international trade, but many consumer products are available that are "made in America". In 2011 it was reported that rising commodity and fuel prices and labor costs in China were exerting upward pressure on prices creating a dilemma for retailers who lost sales during the Great Recession and continue to face a weak market.

Major retail firms in the United States include Walmart, Sears, Amazon.com
Amazon.com
Amazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...

, Target
Target Corporation
Target Corporation, doing business as Target, is an American retailing company headquartered in Minneapolis, Minnesota. It is the second-largest discount retailer in the United States, behind Walmart. The company is ranked at number 33 on the Fortune 500 and is a component of the Standard & Poor's...

, Macy's
Macy's
Macy's is a U.S. chain of mid-to-high range department stores. In addition to its flagship Herald Square location in New York City, the company operates over 800 stores in the United States...

, McDonalds, Burger King
Burger King
Burger King, often abbreviated as BK, is a global chain of hamburger fast food restaurants headquartered in unincorporated Miami-Dade County, Florida, United States. The company began in 1953 as Insta-Burger King, a Jacksonville, Florida-based restaurant chain...

, Safeway
Safeway Inc.
Safeway Inc. , a Fortune 500 company, is North America's second largest supermarket chain after The Kroger Co., with, as of December 2010, 1,694 stores located throughout the western and central United States and western Canada. It also operates some stores in the Mid-Atlantic region of the Eastern...

, A & P
The Great Atlantic & Pacific Tea Company
The Great Atlantic & Pacific Tea Company, better known as A&P, is a supermarket and liquor store chain in the United States. Its supermarkets, which are under six different banners, are found in Connecticut, Delaware, Maryland, New Jersey, New York, and Pennsylvania. A&P's liquor stores, known as...

, and The Home Depot
The Home Depot
The Home Depot is an American retailer of home improvement and construction products and services.The Home Depot operates 2,248 big-box format stores across the United States , Canada , Mexico and China, with a 12-store chain...

. Some, such as Walmart and KFC
KFC
KFC, founded and also known as Kentucky Fried Chicken, is a chain of fast food restaurants based in Louisville, Kentucky, in the United States. KFC has been a brand and operating segment, termed a concept of Yum! Brands since 1997 when that company was spun off from PepsiCo as Tricon Global...

 serve a global market. Outside of the agricultural sector, the cooperative movement
History of the cooperative movement
The history of the cooperative movement concerns the origins and history of cooperatives. Although cooperative arrangements, such as mutual insurance, and principles of cooperation existed long before, the cooperative movement began with the application of cooperative principles to business...

 is anemic in the United States.

Energy



The United States is the 2nd largest energy
Energy development
Energy development is the effort to provide sufficient primary energy sources and secondary energy forms for supply, cost, impact on air pollution and water pollution, mitigation of climate change with renewable energy....

 consumer in terms of total use. 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 fuel
Fossil fuel
Fossil fuels are fuels formed by natural processes such as anaerobic decomposition of buried dead organisms. The age of the organisms and their resulting fossil fuels is typically millions of years, and sometimes exceeds 650 million years...

s: in 2005, it was estimated that 40% of the nation's energy came from petroleum, 23% from coal, and 23% from natural gas. Nuclear power
Nuclear power
Nuclear power is the use of sustained nuclear fission to generate heat and electricity. Nuclear power plants provide about 6% of the world's energy and 13–14% of the world's electricity, with the U.S., France, and Japan together accounting for about 50% of nuclear generated electricity...

 supplied 8.4% and renewable energy
Renewable energy
Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...

 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
Oil reserves
The total estimated amount of oil in an oil reservoir, including both producible and non-producible oil, is called oil in place. However, because of reservoir characteristics and limitations in petroleum extraction technologies, only a fraction of this oil can be brought to the surface, and it is...

 by the middle of the next decade. Transportation
Transportation in the United States
Transportation in the United States is facilitated by road, air, rail, and water networks. The vast majority of passenger travel occurs by automobile for shorter distances, and airplane for longer distances...

 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
Hirsch report
The Hirsch report, the commonly referred to name for the report Peaking of World Oil Production: Impacts, Mitigation, and Risk Management, was created by request for the US Department of Energy and published in February 2005....

.

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
Agribusiness
In agriculture, agribusiness is a generic term for the various businesses involved in food production, including farming and contract farming, seed supply, agrichemicals, farm machinery, wholesale and distribution, processing, marketing, and retail sales....

, and agricultural subsidies, the United States controls almost half of world grain exports
Grain trade
The grain trade refers the local and international trade in cereals and other food grains such as wheat, maize, and rice.-History:The grain trade is probably nearly as old as grain growing, going back the Neolithic Revolution . Wherever there is a scarcity of land The grain trade refers the local...

.

Products include wheat, corn, other grain
Food grain
thumb|150px|Barleythumb|150px|LentilGrains are small, hard, dry seeds harvested for human food or animal feed Agronomists also call the plants producing such seeds grains or grain crops....

s, fruits, vegetables, cotton; beef, pork, poultry, dairy products; forest products; fish.

Manufacturing


The United States is the world's largest manufacturer, with a 2009 industrial output of US$2.33 trillion. Its manufacturing output is greater than of Germany, France, India, and Brazil combined, despite manufacturing being a small portion of the entire US economy as compared to other countries.

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 airplane manufacturing, which represents a large portion of US industrial output. American companies such as Boeing
Boeing
The Boeing Company is an American multinational aerospace and defense corporation, founded in 1916 by William E. Boeing in Seattle, Washington. Boeing has expanded over the years, merging with McDonnell Douglas in 1997. Boeing Corporate headquarters has been in Chicago, Illinois since 2001...

, Cessna
Cessna
The Cessna Aircraft Company is an airplane manufacturing corporation headquartered in Wichita, Kansas, USA. Their main products are general aviation aircraft. Although they are the most well known for their small, piston-powered aircraft, they also produce business jets. The company is a subsidiary...

 (see: Textron
Textron
Textron is a conglomerate that includes Bell Helicopter, E-Z-GO, Cessna Aircraft Company, and Greenlee, among others. It was founded by Royal Little in 1923 as the Special Yarns Company, and is headquartered at the Textron Tower in Providence, Rhode Island, United States.With total revenues of...

), Lockheed Martin
Lockheed Martin
Lockheed Martin is an American global aerospace, defense, security, and advanced technology company with worldwide interests. It was formed by the merger of Lockheed Corporation with Martin Marietta in March 1995. It is headquartered in Bethesda, Maryland, in the Washington Metropolitan Area....

 (see: Skunk Works
Skunk works
Skunk Works is an official alias for Lockheed Martin’s Advanced Development Programs , formerly called Lockheed Advanced Development Projects. Skunk Works is responsible for a number of famous aircraft designs, including the U-2, the SR-71 Blackbird, the F-117 Nighthawk, and the F-22 Raptor...

), and General Dynamics
General Dynamics
General Dynamics Corporation is a U.S. defense conglomerate formed by mergers and divestitures, and as of 2008 it is the fifth largest defense contractor in the world. Its headquarters are in West Falls Church , unincorporated Fairfax County, Virginia, in the Falls Church area.The company has...

 produce a vast majority of the world's civilian and military aircraft in factories stretching across the United States.

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 number of steel workers fell from 500,000 in 1980 to 224,000 in 2000.

The U.S. produces approximately 18% of the world's manufacturing output, a number that has declined as other nations developed competitive manufacturing industries. The job loss during this continual volume growth is the result of multiple factors including increased productivity, trade, and secular economic trends. 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.

Finance



Measured by value
Market capitalization
Market capitalization is a measurement of the value of the ownership interest that shareholders hold in a business enterprise. It is equal to the share price times the number of shares outstanding of a publicly traded company...

 of its listed companies' securities
Security (finance)
A security is generally a fungible, negotiable financial instrument representing financial value. Securities are broadly categorized into:* debt securities ,* equity securities, e.g., common stocks; and,...

, the New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...

 is more than three times larger than any other stock exchange in the world. As of October 2008, the combined capitalization
Market capitalization
Market capitalization is a measurement of the value of the ownership interest that shareholders hold in a business enterprise. It is equal to the share price times the number of shares outstanding of a publicly traded company...

 of all domestic NYSE listed companies was US$10.1 trillion. New York City is the financial capital of the world alongside London.

NASDAQ
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...

 is another American stock exchange
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...

 and the world's 3rd largest exchange after the New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...

 and Japan's Tokyo Stock Exchange
Tokyo Stock Exchange
The , called or TSE for short, is located in Tokyo, Japan and is the third largest stock exchange in the world by aggregate market capitalization of its listed companies...

. However NASDAQ's trade value is larger than Japan's TSE. NASDAQ is the largest electronic
Electronic trading
Electronic trading, sometimes called etrading, is a method of trading securities , foreign exchange or financial derivatives electronically...

 screen-based equity securities
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...

 trading market in the USA. With approximately 3,800 companies and corporations, it has more trading volume per hour than any other stock exchange.

International trade


The United States is the world's largest trading nation. Since it is the world's leading importer, there are many U.S. dollars in circulation all around the planet. The dollar is also used as the standard unit of currency in international markets for commodities such as gold and petroleum.

Large foreign economies like China, Japan and the member states of the European Union 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. China's reserves are more than $3 trillion, the world's largest. China owns an estimated $1.6 trillion of U.S. securities
Security (finance)
A security is generally a fungible, negotiable financial instrument representing financial value. Securities are broadly categorized into:* debt securities ,* equity securities, e.g., common stocks; and,...

.

In 2010, the total U.S. trade deficit was $634.9 billion, which is $1.3 trillion in exports minus $1.9 trillion in imports. The deficit on petroleum products was $270 billion. The trade deficit with China was $273 billion, a new record and up from $304 million in 1983. The United States had a $168 billion surplus on trade in services, and $803 billion deficit on trade in goods in 2010.

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 Forecast. Various state agencies, including the California Department of Finance, also make predictions.

Currency and central bank




The United States dollar is the unit of currency of the United States. The U.S. dollar is the currency most used in international transactions. Several countries use it as their official currency
Dollarization
Dollarization occurs when the inhabitants of a country use foreign currency in parallel to or instead of the domestic currency. The term is not only applied to usage of the United States dollar, but generally to the use of any foreign currency as the national currency.The biggest economies to have...

, and in many others it is the de facto currency.

The federal government attempts to use both monetary policy
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...

 (control of the money supply through mechanisms such as changes in interest rates) and fiscal policy
Fiscal policy
In economics and political science, fiscal policy is the use of government expenditure and revenue collection to influence the economy....

 (taxes and spending) to maintain low inflation, high economic growth, and low unemployment. A relatively private central bank
Central bank
A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...

, known as the Federal Reserve, was formed in 1913 to provide a stable currency and monetary policy
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...

. Despite significant loss of value due to inflation http://inflationdata.com/inflation/inflation_rate/CurrentInflation.asp, the U.S. dollar has been regarded as one of the more stable currencies in the world and many nations back their own currency with U.S. dollar reserves.

The U.S. dollar has maintained its position as the world's primary reserve currency, although it is gradually being challenged in that role. 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, the Euro. Rising US national debt http://www.usdebtclock.org/ and the related rise of China have led to some, especially the Chinese, to call for replacing the dollar as the world's reserved currency, but thus far this has been only speculation.

The dollar used gold standard
Gold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...

 and/or silver standard
Silver standard
The silver standard is a monetary system in which the standard economic unit of account is a fixed weight of silver. The silver specie standard was widespread from the fall of the Byzantine Empire until the 19th century...

 from 1785 until 1971, when it became a floating fiat currency because of problems experienced with attempting to fix prices of commodities.

Regulations


The U.S. federal government
Federal government of the United States
The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...

 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
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...

 such as electric utilities from while allowing prices in the level that would ensure them normal 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
Regulatory capture
In economics, regulatory capture occurs when a state regulatory agency created to act in the public interest instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating. Regulatory capture is a form of government failure, as it can act as...

.

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 competition.

Bank regulation in the United States
Bank regulation in the United States
Bank regulation in the United States is highly fragmented compared with other G10 countries, where most countries have only one bank regulator. In the U.S., banking is regulated at both the federal and state level. Depending on the type of charter a banking organization has and on its...

 is highly fragmented compared to other G10
Group of Ten (economic)
The Group of Ten or G-10 refers to the group of countries that have agreed to participate in the General Arrangements to Borrow...

 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
Usury
Usury Originally, when the charging of interest was still banned by Christian churches, usury simply meant the charging of interest at any rate . In countries where the charging of interest became acceptable, the term came to be used for interest above the rate allowed by law...

 lending, and promoting lending to lower-income segments.
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
Occupational Safety and Health Administration
The United States Occupational Safety and Health Administration is an agency of the United States Department of Labor. It was created by Congress of the United States under the Occupational Safety and Health Act, signed by President Richard M. Nixon, on December 29, 1970...

 provides and enforces standards for workplace safety, and the United States Environmental Protection Agency
United States Environmental Protection Agency
The U.S. Environmental Protection Agency is an agency of the federal government of the United States charged with protecting human health and the environment, by writing and enforcing regulations based on laws passed by Congress...

 provides standards and regulations to maintain air, water, and land resources. The U.S. Food and Drug Administration
Food and Drug Administration
The Food and Drug Administration is an agency of the United States Department of Health and Human Services, one of the United States federal executive departments...

 regulates what drugs may reach the market, and also provides standards of disclosure for food products.

American attitudes about regulation changed substantially 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 regulation.

While leaders of America's two most influential political parties generally favored economic deregulation
Deregulation
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...

 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
Free enterprise
-Transport:* Free Enterprise I, a ferry in service with European Ferries between 1962 and 1980.* Free Enterprise II, a ferry in service with European Ferries between 1965 and 1982....

, 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 Agreement provided states with long-term payments to cover medical costs to treat smoking-related illnesses.

Taxation



Taxation in the United States
Taxation in the United States
The United States is a federal republic with autonomous state and local governments. Taxes are imposed in the United States at each of these levels. These include taxes on income, property, sales, imports, payroll, estates and gifts, as well as various fees.Taxes are imposed on net income of...

 is a complex system which may involve payment to at least four different levels of government and many methods of taxation. Taxes are levied by the federal government
Federal government of the United States
The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...

, by the state governments
State governments of the United States
State governments in the United States are those republics formed by citizens in the jurisdiction thereof as provided by the United States Constitution; with the original 13 States forming the first Articles of Confederation, and later the aforementioned Constitution. Within the U.S...

, and often by local governments
Local government in the United States
Local government in the United States is generally structured in accordance with the laws of the various individual states. Typically each state has at least two separate tiers: counties and municipalities. Some states have their counties divided into townships...

, which may include counties, municipalities, township
Township (United States)
A township in the United States is a small geographic area. Townships range in size from 6 to 54 square miles , with being the norm.The term is used in three ways....

, school district
School district
School districts are a form of special-purpose district which serves to operate the local public primary and secondary schools.-United States:...

s, and other special-purpose district
Special-purpose district
Special-purpose districts or special district governments in the United States are independent governmental units that exist separately from, and with substantial administrative and fiscal independence from, general purpose local governments such as county, municipal, and township governments. As...

s, which include fire, utility, and transit districts.

The National Bureau of Economic Research
National Bureau of Economic Research
The National Bureau of Economic Research is an American private nonprofit research organization "committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community." The NBER is well known for providing start and end...

 has concluded that the combined federal, state, and local government average marginal tax rate
Marginal tax rate
In a tax system and in economics, the tax rate describes the burden ratio at which a business or person is taxed. There are several methods used to present a tax rate: statutory, average, marginal, effective, effective average, and effective marginal...

 for most workers to be about 40% of income. The Tax Foundation
Tax Foundation
The Tax Foundation is a Washington, D.C.-based think tank founded in 1937 that collects data and publishes research studies on tax policies at the federal and state levels. The organization is broken into three primary areas of research which are the Center for Federal Fiscal Policy, The and the...

 concluded that government at all levels will collect 30.8% of the nation's income for 2008. Tax Day
Tax Day
In the United States, Tax Day is a colloquial term for the day on which individual income tax returns are due to the federal government. The term may also refer to the same day for states, even where the tax return due date is a different day....

, the day by which tax returns
Tax return (United States)
Tax returns in the United States are reports filed with the Internal Revenue Service or with the state or local tax collection agency containing information used to calculate income tax or other taxes...

 are due, is usually April 15.

Expenditure




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 economic activity.

State governments
Politics of the United States
The United States is a federal constitutional republic, in which the President of the United States , Congress, and judiciary share powers reserved to the national government, and the federal government shares sovereignty with the state governments.The executive branch is headed by the President...

, 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.

The welfare system in the United States began in the 1930s, during the Great Depression. After the Great Society
Great Society
The Great Society was a set of domestic programs in the United States promoted by President Lyndon B. Johnson and fellow Democrats in Congress in the 1960s. Two main goals of the Great Society social reforms were the elimination of poverty and racial injustice...

 legislation of the 1960s, for the first time a person who was not elderly or disabled could receive a living from the American government.

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.
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
Emergency Economic Stabilization Act of 2008
The Emergency Economic Stabilization Act of 2008 The Emergency Economic Stabilization Act of 2008 The Emergency Economic Stabilization Act of 2008 (Division A of , commonly referred to as a bailout of the U.S. financial system, is a law enacted in response to the subprime mortgage crisis...

" raised the current debt ceiling to US$ 11.3 trillion.

The federal government's debt rose by almost $1.4 trillion in 2009, and now stands at $12.1 trillion. While the U.S. public debt is the world's largest in absolute size, another measure is its size relative to the nation's 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
Economy of Japan
The economy of Japan, a free market economy, is the third largest in the world after the United States and the People's Republic of China, and ahead of Germany at 4th...

 (192%) (the overwhelming number of owners of JGBs are Japanese) and roughly equivalent to those of a few western European nations.

See also


  • Affluence in the United States
    Affluence in the United States
    Affluence in the United States refers to an individual's or household's state of being in an economically favorable position in contrast to a given reference group...

  • Energy policy of the United States
    Energy policy of the United States
    The energy policy of the United States is determined by federal, state and local public entities in the United States, which address issues of energy production, distribution, and consumption, such as building codes and gas mileage standards...

  • Economic history of the United States
    Economic history of the United States
    The economic history of the United States has its roots in European colonization in the 16th, 17th, and 18th centuries. Marginal colonial economies grew into 13 small, independent farming economies, which joined together in 1776 to form the United States of America...

  • Economy of Puerto Rico
    Economy of Puerto Rico
    The Economy of Puerto Rico is one of the most diverse in the Caribbean region. Services and industrial production have surpassed agriculture as the primary focus of economic activity and income. Encouraged by duty-free access to the US and by tax incentives, United States firms have invested...

  • Historical Statistics of the United States
    Historical Statistics of the United States
    Historical Statistics of the United States is a compendium of statistics about United States. Originally published by the United States Census Bureau until 1975 is now being published by Cambridge University Press...

  • Household income in the United States
    Household income in the United States
    Household income is a measure commonly used by the United States government and private institutions, that counts the income of all residents over the age of 18 in each household, including not only all wages and salaries, but such items as unemployment insurance, disability payments, child support...

  • Income inequality in the United States
    Income inequality in the United States
    Income inequality in the United States of America refers to the extent to which income is distributed in an uneven manner in the US. Data from the United States Department of Commerce, CBO, and Internal Revenue Service indicate that income inequality among households has been increasing...

  • Income in the United States
    Income in the United States
    Income in the United States is measured by the United States Department of Commerce either by household or individual. The differences between household and personal income is considerable since 42% of households, the majority of those in the top two quintiles with incomes exceeding $57,658, now...

  • Labor unions in the United States
    Labor unions in the United States
    Labor unions in the United States are legally recognized as representatives of workers in many industries. The most prominent unions are among public sector employees such as teachers and police...

  • National debt by U.S. presidential terms
    National debt by U.S. presidential terms
    In the United States, national debt is money borrowed by the federal government of the United States. Debt burden is usually measured as a ratio of public debt to gross domestic product; the U.S. debt/GDP ratio reached a maximum during World War II near the beginning of President Harry Truman's...

     – includes federal spending and GDP
  • Personal income in the United States
    Personal income in the United States
    Personal income is an individual’s total earnings from wages, investment interest, and other sources. In the United States the most widely cited personal income statistics are the Bureau of Economic Analysis’s personal income and the Census Bureau’s per capita money income...

  • United States federal budget
    United States federal budget
    The Budget of the United States Government is the President's proposal to the U.S. Congress which recommends funding levels for the next fiscal year, beginning October 1. Congressional decisions are governed by rules and legislation regarding the federal budget process...

  • Wealth in the United States
    Wealth in the United States
    Wealth in the United States is commonly measured in terms of net worth, which is the sum of all assets, including home equity, minus all liabilities....



Events:
  • Late-2000s recession
  • Proposed bailout of U.S. financial system (2008)
  • Subprime mortgage crisis
    Subprime mortgage crisis
    The U.S. subprime mortgage crisis was one of the first indicators of the late-2000s financial crisis, characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages....

  • Oil price increases since 2003


Lists:

External links