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The world's leading economic power


Vestern Hemlock
Vestern Hemlock

United States Economy, all of the ways goods and services are produced, distributed, and consumed by individuals and businesses in the United States. The U.S. economy is immense. In 2005 it included more than 295 million consumers and more than 20 million businesses. U.S. consumers purchase more than $6 trillion of goods and services annually, and businesses invest over a trillion dollars more for factories and equipment. In addition to spending by private households and businesses, government agencies at all levels (federal, state, and local) spend roughly an additional $2 trillion a year. In total, the annual value of all goods and services produced in the United States, known as the Gross Domestic Product (GDP), was $13 trillion in 2006.

Those levels of production, consumption, and spending make the U.S. economy by far the largest economy the world has ever known—despite the fact that some other nations have far more people, land, or other resources. Through most of the 20th century and continuing into the 21st century, U.S. citizens also enjoyed the highest material standards of living in the world. Some nations have higher per capita (per person) incomes than the United States. However, these comparisons are based on international exchange rates, which set the value of a country’s currency based on a narrow range of goods and services traded between nations. Most economists agree that the United States has a higher per capita income based on the total value of goods and services that households consume.

American prosperity has attracted worldwide attention and imitation. There are several key reasons why the U.S. economy has been so successful and other reasons why, in the 21st century, it is possible that some other industrialized nations will surpass the U.S. standard of living.

To understand those historical and possible future events, it is important first to understand what an economic system is and how that system affects the way people make decisions about buying, selling, spending, saving, investing, working, and taking time for leisure activities

This article consists of ten major sections. The first section of this article discusses how individual people, business and labor organizations, and social institutions make up the U.S. economic system. Next, the article discusses the production of goods and services. The third section describes the different types of businesses that operate in the United States, such as proprietorships, partnerships, and corporations. It also discusses how entrepreneurs acquire and organize the funding and resources needed to run a business. Capital, savings, and investment are taken up in the fourth section, which explains how the long-term growth of any economy depends upon the relationship between investments in capital goods (inventories and the facilities and equipment used to make products) and the level of saving in that economy. The next section explains the role money and financial markets play in the economy. Labor markets, the topic of section six, are also extremely important in the U.S. economy, because most people earn their incomes by working for wages and salaries. By the same token, for most firms, labor is the most costly input used in producing the things the firms sell.

The role of government in the U.S. economy is the subject of section seven. The government performs a number of economic roles that private markets cannot provide. It also offers some public services that elected officials believe will be in the best interests of the public. The relationship between the U.S. economy and the world economy is discussed in section eight. Section nine looks at current trends and issues that the U.S economy faces at the start of the 21st century. The final section provides an overview of the kinds of goods and services produced in the United States. Encarta "USA" © Emmanuel BUCHOT, Encarta, Wikipedia

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