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The US Economy
The United States has the world’s largest and most powerful economy. It has a GDP of USD 15.94 trillion, and a per capita GDP of USD 49,800. In this market-oriented system, private companies and powerful businessmen and women make the important decisions. As opposed to Western Europe and Japan, US businesses enjoy more flexibility in terms of the power to make decisions to develop new products, expand capital, and lay off surplus workers. US companies are market leaders when it comes to technological advances in the medical, computer, aerospace, and military equipment fields.
When the GDP is broken into sectors, the service sector comes out overwhelmingly on top, with 79.7% of the total. In comparison, the secondary sector only accounts for 19.2% of the GDP and the primary sector only a miniscule 1.1%.
The United States has a labor force of 155 million, with 37.3% working in managerial, professional, and technical fields. Then come sales and office positions, which account for 24.2% of the workforce, followed closely by 20.3% with jobs in the fields of manufacturing, extraction, transportation, and crafts. The remaining 18.3% of the labor force are employed either in farming, forestry, and fishing (0.7%) or positions in the service sector not covered by the previous categories.
Financial Crisis and Recession
Between 2001 and 2006, crude oil prices rose significantly, which caused hardships for many Americans, as imported oil accounts for 55% of US consumption. When home prices also peaked in 2006, many Americans fell behind in their mortgage payments. Crude oil prices continued to climb another 50% over the next two years, and this period also saw the collapse of the US housing bubble, which resulted in the doubling of bank foreclosures on homes. The sub-prime mortgage crisis, falling home prices, investment bank failures, tight credit, and the resultant global economic downturn, all united to push the US economy into recession by the middle of 2008.
The GDP continued to contract until the third quarter of 2009, making this the deepest and longest recession since the Great Depression in the 1930s. With financial help from the government to stimulate the economy and the passing of acts to promote financial stability through improved accountability and transparency in the financial system, as well as stricter regulations for banks, steady improvement started to be made as of 2010.
The US economy has experienced slow and gradual growth since the official end of the recession in mid-2009. Unemployment has decreased from 10% at the high point of the recession to 7.3% in October 2013, although part of this is due to the fact that many people have stopped looking for jobs and dropped out of the labor force altogether. In 2013, sequestration and the government shutdown in October impeded further growth, but with a budget deal reached by the House and Senate, faster growth can be expected in 2014.
Continuing and long-term problems that still face the US economy are the rapidly increasing medical and pension costs of an aging population, energy shortages, the stagnation of the salaries for low-income families, inadequate investment in the deteriorating infrastructure, and large budget deficits.
The scope of US industries is highly diversified and the country can boast the second-largest industrial output in the world. Major industries in the United States include steel, petroleum, aerospace, motor vehicles, telecommunications, electronics, chemicals, food processing, consumer goods, mining, and lumber.
A lot of jobs are returning to the US now that the recent recession is over. The 2014 outlook for machinery and plant engineering is good; it reached its pre-crisis levels in October 2013. The car industry is gradually returning to pre-crisis levels. Significant growth can be seen in the information and communication technology sector, with growing demand for mobile technology and associated infrastructure. The US medical engineering and technology sector continues to be the largest in the world, and is predicted to grow 3-5% in the coming years.
The pharmaceutical industry, on the other hand, is not doing as well. Its growth depends largely on the success of Obamacare. Another major industry in the US is the electricity sector, where the change to renewable energy and the modernization of the US electrical grid, among other things, will continue to require lots of investment. The development of new, innovative extraction methods will keep the oil and gas industry at the forefront of US growth in 2014 and beyond.
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