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 worlds 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 worlds 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%.
STRUCTURE OF THE ECONOMY• World’s largest• Free Market (Actually mixed economy) Low government regulations• Impacts world markets Biggest trading partner to 60 countries
STRUCTURE OF THE ECONOMY• Highest labour force participation rate 139.396 million employed• US Industry Sectors • Agriculture 1.2% • Industrial 19.6% • Services 79.2%
• GDP • IIP• GNP• CPI • PPI• WPI • Exports• Inflation • Imports• Unemployment • 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) GDP of USA 16.00 15.09 13.96 14.22 14.45 13.86 14.00 13.31 12.56 11.80 12.00 10.59 11.09 10.00GDP in Trillions 8.00 6.00 4.00 2.00 0.00 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Year
HUMAN DEVELPOMENT INDEX (HDI) Human Development Index for USA Gross GNI per Human Life Expected Mean years National capita rank Non IncomeYear Development expectancy at years of of schooling Income (GNI) minus HDI HDI Index (HDI) birth schooling per capita rank2011 0.910 78.5 12.4 16.0 43,017 6 0.931
HUMAN DEVELPOMENT INDEX (HDI) HDI for USA 0.915 0.91 0.91 0.908 0.907 0.906 0.905 0.905 0.904 0.902HDI 0.9 0.897 0.895 0.89 2000 2005 2006 2007 2008 2009 2010 2011 Year
MeasuresMonetary 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.
MeasuresFiscal 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.
SUMMARY THOUGHTS •Economic growth signals are still positive and consumption is apparently rebounding, whileGOOD corporate earnings are strong. Unemployment, Housing, Interest Rates, and Oil all BAD loom as potential caution flags that could reverse the good news story Government debt and overall debt are not going awayUGLY as major issues that could reduce long term growth and lead to unpleasant outcomes 33
SUMMARY THOUGHTS •Economic growth signals are still positive and consumption is apparently rebounding, whileGOOD corporate earnings are strong. Unemployment, Housing, Interest Rates, and Oil all BAD loom as potential caution flags that could reverse the good news story Government debt and overall debt are not going awayUGLY as major issues that could reduce long term growth and lead to unpleasant outcomes 34
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% 35