Economy of the United States

The United States has the largest single-country economy in the world, with a per-capita annual gross domestic product of USD 41,747 (as of Q2 2005 [1]). In this market-oriented economy, private individuals and business firms make most of the decisions, and the federal and state governments buy needed goods and services predominantly in the private marketplace. This is financed via taxes and borrowings in the money and capital markets. Federal borrowings are subject to borrowing caps to theoretically prevent fiscal irresponsibilty. The cap as of 2004 stands at 8.2 trillion. (Borrowings as of November 2005 are 8.1 trillion.)

The largest industry in the U.S. is now service, which employs roughly three quarters of the work force. The United States has many natural resources, including oil and gas, metals, and such minerals as gold, soda ash, and zinc. In agriculture, it is a top producer of, among other crops, corn, soy beans, and wheat; the United States is a net exporter of food. The manufacturing sector produces goods such as, cars, airplanes, steel, and electronics, among many others.

Economic activity varies greatly from one part of the country to another, with many industries being concentrated in certain cities or regions. For example, New York City is the center of the American financial, publishing, broadcasting, and advertising industries. Silicon Valley is the country’s largest high technology hub, while Los Angeles is the most important center for film production.

The Midwest is known for its reliance on manufacturing and heavy industry, with Detroit, Michigan, serving as the center of the American automotive industry. The Great Plains are known as the “breadbasket” of America for their tremendous agricultural output; the intermountain region serves as a mining hub and natural gas resource; the Pacific Northwest for fish and timber, while Texas is largely associated with the oil industry; and the Southeast is a major hub for both medical research and the textiles industry.

Several countries continue to link their currency to the dollar or even use it as a currency (such as Ecuador), although this practice has subsided since the collapse of the Bretton Woods system. Many markets are also quoted in dollars, such as those of oil and gold. The dollar is also the predominant reserve currency in the world, and more than half of global reserves are in dollars.

The largest trading partner of the United States is Canada (19%), followed by China (12%), Mexico (11%), and Japan (8%). More than 50% of total trade is with these four countries.

In 2003, the United States was ranked as the third most visited tourist destination in the world; its 40,400,000 visitors ranked behind France’s 75,000,000 and Spain’s 52,500,000.

Labor unions have existed since the 19th century, and grew large and powerful from the 1930s to the 1950s. See Labor history of the United States. Since 1970 they have shrunk in the private sector and now cover fewer than 8% of the workers. However union membership has grown rapidly in the public sector, especially among teachers, nurses, police, postal workers, and municipal clerks. There have been few strikes in recent years.

The United States’ imports exceed exports by 80%, leading to an annual trade deficit of USD 700,000 million or 6% of gross domestic product. It is the largest debtor nation in the world, with total gross foreign liabilities of over USD 12,000,000 million as of of 2004; and it absorbs more than 50% of global savings annually.

Since the 1980s, the U.S. has increased the use of neoliberal economic policies that reduce government intervention and reduce the size of the welfare state, backing away from the more interventionist Keynsian economic policies that had been in favor since the Great Depression. As a result, the United States provides fewer government-delivered social welfare services than most industrialized nations, choosing instead to keep its tax burden lower and relying more heavily on the free market and private charities.

Sixteen states and the District of Columbia have minimum wages higher than the national level (USD 5.15 per-hour), including the highest, Washington State at USD 7.35. Twenty-six states are the same as the federal level; two - Ohio and Kansas - are below; and six do not have state laws.