How strong is the u.s. economy today? What type of economy is the USA?
The economy of the United States is the largest and most important in the world. Currently, the country is having the eighth-highest per capita $65,112 (2019 est.) Gross Domestic Product or GDP. The US economy is also robust in technological advancements and represents almost 20% of the global output.
The sectors which highly dominate the US economy are technology, financial services, healthcare, etc. The COVID 19 cases may lead the economy to slip a bit, but the officials still believe it may recover during the third quarter of the year.
History of the US Economy
However, the golden period of the US economy begins after the end of World War II. That period boosted economic activities and provided more production to the middle class.
From 1940-1970, the GDP rose at a rate of nearly 4%. By the end of 1970, the US economy showed structural change due to increased industrial and manufacturing services.
Nevertheless, the growth of the economy began to slow down after several years of the extraordinary rise due to the fall of the Bretton Woods system or the 1973 oil crisis, which increased the global competition. Since the growth of the economy was stagnant, 1970 was referred to as stagflation.
During the 1980s, new technologies were emerging, giving rise to productive IT companies. These companies offer jobs to a large number of people. From 1993 to 2001, the economy of the US showed a long and sustained growth due to an increase in employment and consumer demand.
The US economy again collapsed seriously during the Great Recession period from December 2007 to June 2009. It then came to its original peak by 2011, decreasing the unemployment rate by September 2015.
The incoming of COVID 19 pandemic in 2020 made the economic growth to fall again. It affects the US economy severely and is described as “far worse” than the Great Recession.
The United States stands second in exporting goods and services worldwide but is the number one leading importer. This trade deficit is due to dependence on foreign oil.
The country imports too much oil from different parts of the world to fulfill its energy requirements and specific domestic demands. However, the deficit gap is now reducing due to the production of domestic oil in the country.
The United States is an integral part of the international trade system and can benefit a lot in reduced trade barriers and free trade agreements.
Certain Facts of the US Economy
GDP calculates everything in the United States, whether a US national, company or a foreigner.
The government collects funds through income taxes. They spend in mostly three things- Social Security Benefits, Military Spending, and Healthcare.
The US military spending is around $934 billion, covering the period from October 2020 to September 2021. The country has many wings that support its defense system.
The debt of the country is over $26 trillion, which is more than its economic output. When the debt-to-GDP ratio is above 77%, the country enters a danger zone in terms of economy. And during the financial crisis of 2008, this ratio was increased above 77%, marking some severe issues for the country.
Transportation and Energy
Road transports play an essential role in affecting the economy of the US. The country is glorified to have the highest rate of per-capita vehicle ownership in the world. There are 765 vehicles for every 1000 citizens.
Almost 31 million people use intercity rail travel to avoid low population density in some areas. In terms of airways, the three largest airlines are US-based. American Airlines became number one when US Airways purchased it in 2013. Amongst 30 busiest passenger airports, 12 are located in the United States.
The US ranks second in terms of energy-consuming. The country had imported around 2808 million barrels of crude oil in 2013. According to The Wall Street Journal reports, it can continue till 2020.
Effects of COVID 19 on US Economy
The US economy suffered a major setback in March 2020 due to the spread of coronavirus and the shut-down of the country. The negative impact on the trading of several goods and services caused the GDP to decline at a 4.8% rate.
By June 2020, the government had stopped all the international flights. According to the New York Times reports, on 10th June, the budget deficit grew to $1.88 trillion for the first time. The Economy of the USA has the power to survive another recession, but We have to keep watching how the world Proceeds into post COVID19.