LATEST UNITED STATES ECONOMIC INDICATORS

Latest United States Economic Indicators

Latest United States Economic Indicators

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. In 230 years the United States grew to a huge, integrated, industrialized economy that makes up over a quarter of the world economy. 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, iron, and oil), and an entrepreneurial spirit and commitment to investing in material and human capital. The economy has maintained high wages, attracting immigrants by the millions from all over the world. Technological and industrial factors played a major role.

The United States of America (US or USA) has the world's largest economy. According to the CIA World Factbook, 2007 GDP is believed to be $13.84 trillion. This is three times the size of the next largest economy, Japan, which has a GDP of $4.4 trillion. US dominance has been eroded however by the creation of the European Union common market, which has an equivalent GDP of over $13 trillion, and by the rapid growth of the BRIC economies, in particular China, which is forecast to overtake the US in size within 30 years.

The recent failure in the US housing and credit markets have resulted in a slowdown in the US economy. 2007 GDP growth was estimated at 2.2% but in 2008 it is projected to be just 0.9%, down from the 10-year average of 2.8% (see chart at end of article).

In common with most developed countries, Services is the key sector of the economy. In 2007, services made up 78.5% of GDP, industry 20.5% and agriculture less than 1%. Around two-thirds of the total production of the country is driven by personal consumption. Although the US is often referred to as a free market economy, this is not entirely true, since there are government regulations protecting certain sectors, notably energy and agriculture. It can be more accurately described as a 'consumer economy'.

Since the US economy is also the largest economy in the world, and the US consumer drives two thirds of the US economy, the US consumer is also a big driver of global economic activity. The forces of supply and demand directly drive the price levels of goods and services. What to produce, and how much of it is to be produced depends on the price level fixed by the interaction of supply and demand.

The role of government in the US economy is crucial when it comes to decision-making regarding monetary and fiscal policies. The federal government takes all the necessary initiatives to ensure the growth and stability of the United States. The US government makes full use of economic tools such as money supply, tax rates, and credit control, among other things, to adjust the rate ...