Economy of USA
By: Kushagra Sharma [12DCP-057]Prodyot Parashar [12DCP-083]Raj Kumar Singh [12DCP-089]
Introduction
• Consists of 50 districts and a federal district, with Washington, D.C. as its capital.
• At 3.79 million square miles and with over 314 million people, it is the 4th largest country by total area, and 3rd largest by population.
• One of the world's most ethnically diverse and multicultural nations, the product of large-scale immigration from many countries.
• US economy is the largest in the world with a GDP of $ 15.1 trillion.
• Ranks 9th in the world in nominal GDP per capita.
Contd..
• Its currency U.S. dollar ($) is the world's primary reserve currency.
• It is the largest importer of goods and third largest exporter.
• In 2010, the total U.S. trade deficit was $635 billion.
• Canada, China, Mexico, Japan, and Germany are its top trading partners & China is the largest foreign holder of U.S. public debt.
• In 2009, the private sector was estimated to constitute 86.4% of the economy, federal government activity 4.3% and state and local government activity 9.3%.
•World’s largest
• Free Market (Actually mixed economy)Low government regulations
• Impacts world marketsBiggest trading partner to 60 countries
STRUCTURE OF THE ECONOMY
• Highest labour force participation rate139.396 million employed
• US Industry Sectors
• Agriculture 1.2%• Industrial 19.6%• Services 79.2%
STRUCTURE OF THE ECONOMY
NATIONAL ACCOUNTS AND MACRO ECONOMIC AGGREGATES
• GDP• GNP• CPI• WPI• Inflation• Unemployment
• IIP• PPI• Exports• Imports• Balance of Trade
Gross domestic product (GDP)
Market value of all officially recognized final goods and services produced within a country in a given period.
Gross domestic product (GDP)
2002 2003 2004 2005 2006 2007 2008 2009 2010 20110.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
10.59 11.0911.80
12.5613.31 13.96 14.22 13.86 14.45 15.09
GDP of USA
Year
GD
P in
Tril
lions
Gross domestic product (GDP) Growth Rate
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
1.83%2.55%
3.48%3.08%
2.66%1.91%
-0.36%
-3.53%
3.02%
1.70%
GDP Growth Rate of USA
Year
GD
P G
row
th R
ate
GROSS NATIONAL PRODUCT (GNP)
Total income earned by the nation’s factors of production, regardless of where located
GROSS NATIONAL PRODUCT (GNP)
2002 2003 2004 2005 2006 2007 2008 2009 2010 20110.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
10.66 11.1411.91
12.7613.63 14.10 14.39 13.94 14.64 15.23
GNP of USA
Year
GN
P in
Tril
lions
GDP COMPARISON
US22%
China11%
India3%
Japan8%
Others65%
GDP(2010)
US32%
China3%
India1%
Others51%
Japan13%
GDP (2001)
INFLATION RATE
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
-1
0
1
2
3
4
5
1.6
2.32.7
3.4 3.22.8
3.8
-0.4
1.6
3.2
Inflation Rate in USA
Year
Infla
tion
Rate
%
UNEMPLOYMENT RATE
2002 2003 2004 2005 2006 2007 2008 2009 2010 20110
2
4
6
8
10
12
5.8 6 5.5 5.1 4.6 4.65.8
9.3 9.69
Unemployment Rate in USA
Year
Une
mpl
oym
ent R
ate
%
WHOLESALE PRICE INDEX (WPI)
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 20000
20
40
60
80
100
120
140 127.73117.37
109.85120.45
109.69 104.67 10093.18 87.75 83.3 85.26 84.32
WPI of USA
year
wpi
INTERNATIONAL INVESTMENT POSITION (IIP)
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
-4,500,000
-4,000,000
-3,500,000
-3,000,000
-2,500,000
-2,000,000
-1,500,000
-1,000,000
-500,000
0
-4,030,250
-2,473,599-2,321,770
-3,260,158
-1,796,005-2,191,653
-1,932,149-2,253,026-2,093,794-2,044,631-1,875,032
-1,337,014
I IP of USA
Year
IIP
PPI
HUMAN DEVELPOMENT INDEX (HDI)
HUMAN DEVELPOMENT INDEX (HDI)
Human Development Index for USA
YearHuman
Development Index (HDI)
Life expectancy at
birth
Mean years of schooling
Expected years of
schooling
Gross National
Income (GNI) per capita
GNI per capita rank minus HDI
rank
Non Income HDI
2011 0.910 78.5 12.4 16.0 43,017 6 0.931
HUMAN DEVELPOMENT INDEX (HDI)
2000 2005 2006 2007 2008 2009 2010 20110.89
0.895
0.9
0.905
0.91
0.915
0.897
0.9020.904 0.905
0.907 0.9060.908
0.91
HDI for USA
Year
HD
I
Exports
Imports
Balance of Trade
Recent Fiscal and
Monetary Policy
Fiscal Deficit
$1.3 Trillion
Fiscal Deficit
More than 8% of GDP
Fiscal Deficit
Close to the 1930’s Deficit
US Borrowings
From Bank And InvestorsFrom Foreign GovernmentsFrom World Bank
US Borrowings
Measures
Monetary policy• Fed responded to the problems by reducing the federal funds target
and the discount rate.• Beginning on September 18, 2007, and ending on December 16, 2008,
the target was reduced from 5¼% to a range between 0% and ¼%, where it currently remains.• Purchasing longer-term securities--specifically, Treasury, agency, and
agency mortgage-backed securities--on the open market.
Measures
Fiscal Policy• Deteriorated since the onset of the financial crisis and the recession.
• Congressional Budget Office (CBO) projections :deficit to fall from current 9 percent of GDP to 5 percent of GDP by 2015, but then to rise to about 6-1/2 percent of GDP by 2020.
• To stabilize the ratio of federal debt to the GDP the primary budget deficit must be reduced to 0.4.
33
SUMMARY THOUGHTS
•Economic growth signals are still positive and consumption is apparently rebounding, while corporate earnings are strong.
GOOD
BAD
UGLY
Unemployment, Housing, Interest Rates, and Oil all loom as potential caution flags that could reverse the good news story
Government debt and overall debt are not going away as major issues that could reduce long term growth and lead to unpleasant outcomes
34
SUMMARY THOUGHTS
•Economic growth signals are still positive and consumption is apparently rebounding, while corporate earnings are strong.
GOOD
BAD
UGLY
Unemployment, Housing, Interest Rates, and Oil all loom as potential caution flags that could reverse the good news story
Government debt and overall debt are not going away as major issues that could reduce long term growth and lead to unpleasant outcomes
35
Conclusion
• The U.S. economy will be firing on more cylinders in 2011• Net exports will contribute to growth and housing will (hopefully) stop
being a drag by mid-year; nonresidential construction has turned the corner• The pace of consumer spending has also accelerated, thanks to a gradual
improvement in the employment outlook and diminished worries about a double-dip• By far the best news is that business optimism is the highest in three years
and cash flow remains very strong• The Obama-Republican tax package will add around 0.6 percentage point
to growth in 2011, but much of the recent rebound is not stimulus related • Don’t expect any significant action on the deficit until after 2012• Bottom line: growth in the next few year swill average 3% to 3.5%
36
Thank You