THE UNITED STATES OF

AMERICA
ECONOMY
PRESENTED BY:
SHANKY
RAHUL
RAJENDRA
VENKATESH
KARAN
NAITIK
ROHIT

Jan 28, 2009 IIPM 1

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 What is an
Economic System?

An Economic system is a long-term

arrangement by which various units with in a
society are induced to cooperate in production,
distribution and the use of aggregated product,
including the means of control over productive
factors and freedom or constraints on individual
units in the existing factor or goods market.

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 Currency United States Dollar (USD)
Fiscal year 1 October - 30 September
Trade organizations NAFTA (North American Free
Trade Agreement), WTO( World Trade Organization),
OECD (Organization for Economic Corporation and
Development) and others Statistics
GDP (PPP)$13.84 trillion (2007 est.)
GDP growth 2.2% (2007 est.)
GDP per capita $46,000 (2007 est.)
GDP by sector
Agriculture (0.9%)
Industry (20.6%)
Services (78.5%)
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 Labor force by occupation

managerial and professional (35.5%)

Technical, sales and administrative support
(24.8%),
Services (16.5%),
Manufacturing, mining, transportation, and crafts
(24%),
Farming, forestry, and fishing (0.6%) (excludes
unemployed)

Unemployment 5.5% (May 2008)

Main industries: Petroleum, Steel, Motor vehicles,
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 Industrial production growth rate: 3.2% (2005
est.)
Electricity:
Production: 3.979 trillion kWh (2004)
Consumption: 3.717 trillion kWh (2004)
Exports: 22.9 billion kWh (2004)
Imports: 34.21 billion kWh (2004)
Electricity - production by source:
Fossil fuel: 71.6%
Hydro: 5.6%
Nuclear: 20.6%
Other: 2.3% (2001)
Jan 28, 2009 IIPM 6
 Oil

production: 7.61 million barrel/day (2005 est.)

consumption: 20.03 million barrel/day (2003 est.)
exports: 1.048 million barrel/day (2004 est.)
imports: 13.15 million barrel/day (2004 est.)
net imports: 12.097 million barrel/day (2004 est.)
proved reserves: 22.45 billion barrel (1 January 2002)

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Jan 28, 2009 IIPM 8
Source: www.wikipedia.com
 History
of US Economy

In 1933, Congress created the Federal

Deposit Insurance Corporation (FDIC)
which presently guarantees checking and
savings deposits in member banks up to
$100,000 per depositor to prevent bank
failures. This was in response to the
widespread bank runs of the early 1930s
during the Great Depression. The
economic history of the United States has
its roots in European settlements in the
16th, 17th, and 18th centuries.
Jan 28, 2009 IIPM 9
 The American colonies progressed from
marginally successful colonial economies
to a small, independent farming economy,
which in 1776 became the United States of
America. In 230 years the United States
grew to a huge, integrated, industrialized
economy that makes up over a quarter of
the world economy. The main causes were
a large unified market, a supportive
political-legal system, vast areas of highly
productive farmlands, vast natural
resources (especially timber, coal and oil),
and an entrepreneurial spirit and
commitment to investing in material and
human capital. The economy has
maintained high wages, attracting
Jan 28, 2009 IIPM 10
immigrants by the millions from all over
Depression of the 1930s, recessions—
periods of slow economic growth and high
unemployment—were viewed as the
greatest of economic threats. When the
danger of recession appeared most
serious, government sought to strengthen
the economy by spending heavily itself or
cutting taxes so that consumers would
spend more, and by fostering rapid growth
in the money supply, which also
encouraged more spending. In the 1970s,
economic woes brought on by the costs of
the Vietnam conflict, major price
increases, particularly for energy, created
a strong fear of inflation. As a result,
government leaders came to concentrate
more on controlling inflation than on
combating recessionIIPM
Jan 28, 2009
by limiting spending,
11
Ideas about the best tools for stabilizing
the economy changed substantially
between the 1960s and the 1990s. In the
1960s, government had great faith in
fiscal policy—manipulation of government
revenues to influence the economy. Since
spending and taxes are controlled by the
president and the U.S. Congress, these
elected officials played a leading role in
directing the economy. A period of high
inflation, high unemployment, and huge
government deficits weakened confidence
in fiscal policy as a tool for regulating the
overall pace of economic activity. Instead,
monetary policy assumed growing
prominence.
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Government Intervention

Some efforts seek, either directly or

indirectly, to control prices. Traditionally,
the government has sought to prevent
monopolies such as electric utilities from
raising prices beyond the level that would
ensure them reasonable profits. At times,
the government has extended economic
control to other kinds of industries as
well. In the years following the Great
Depression, it devised a complex system
to stabilize prices for agricultural goods,
which tend to fluctuate wildly in response
to28,rapidly
Jan 2009 changing supply
IIPM and demand. 13
CONTD…

A number of other industries—trucking

and, later, airlines—successfully sought
regulation themselves to limit what they
considered as harmful price cutting.
Another form of economic regulation,
antitrust law, seeks to strengthen market
forces so that direct regulation is
unnecessary. The government—and,
sometimes, private parties—have used
antitrust law to prohibit practices or
mergers that would unduly limit
competition.

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Monetary Policy

The federal government attempts to

use both monetary policy (control of the
money supply through mechanisms such
as changes in interest rates) and fiscal
policy (taxes and spending) to maintain
low inflation, high economic growth, and
low unemployment. A relatively
independent central bank, known as the
Federal Reserve, was formed in 1913 to
provide a stable currency and monetary
policy. The U.S. dollar has been regarded
as one of the most stable currencies in the
world and many nations back their own
currency with U.S. dollar reserves. During
the last few years,IIPMthe U.S. dollar has
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 National Debt

The national debt, also

known as the U.S. public debt (part of
which is the gross federal debt), is the
overall collective sum of yearly budget
deficit owed by all branches of the United
States government, plus interest. The
economic significance of this debt and its
potential ramifications for future
generations of Americans are
controversial issues in the United States.
As of January 30, 2008, the total U.S.
federal debt was approximately $9.20
trillion, or about $79,000 in average for
each of the 117 million American
taxpayers.
Jan 28, 2009 The borrowing
IIPM cap debt ceiling
16
 In March 2006, Congress raised that
ceiling an additional $0.79 trillion to $
8.97 trillion, which is approximately 68%
of GDP. Congress has used this method to
deal with an encroaching debt ceiling in
previous years, as the federal borrowing
limit was raised in 2002 and 2003.
While the U.S. national debt
is the world's largest in absolute size, a
more convenient measure is that of its
size relative to the nation's GDP. When the
national debt is put into this perspective it
appears considerably less today than in
past years, particularly during World War
II. By this measure, it is also considerably
less than those of other industrialized
nations such as IIPM
Jan 28, 2009
Japan and roughly 17
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 Gross U.S. liabilities to foreigners are
$16.3 trillion as at end 2006.(over 100% of
GDP). The U.S. Net International
Investment Position (NIIP) deteriorated to
a negative $2.5 trillion at the end of 2006,
or about minus 19% of GDP.
This figure rises as long as the US
maintains an imbalance in trade,
specifically, when the value of imports
substantially outweighs the value of
exports. It should be noted that this
external debt does not, for the most part,
represent lending to Americans or the
American government, nor is it consumer
debt owed to non-US creditors. However,
this is not the whole picture, as foreign
Jan 28, 2009 IIPM 19
holdings of government debt currently
CONTD…

For countries like the United States, a

large net external debt is created when
the value of foreign assets (debt and
equity) held by domestic residents is less
than the value of domestic assets held by
foreigners. In simple terms, as foreigners
buy property in the US, this adds to the
external debt. When this occurs in greater
amounts than Americans buying property
overseas, nations like the United States
are said to be debtor nations, but this is
not conventional debt like a loan obtained
from a bank. However, foreigners also
purchase U.S. debt instruments, such as
government bonds, which are forms of
conventional debt. IIPM
Jan 28, 2009 20
Poverty

Here is significant disagreement about

poverty in the United States, particularly
over how poverty ought to be defined.
Using radically different definitions, two
major groups of advocates have claimed
variously that (a) the United States has
eliminated poverty over the last century;
or (b) it has such a severe poverty crisis
that it ought to devote significantly more
resources to the problem. The debate
includes how poverty should be defined.
Measures of poverty can be either
absolute or relative. Absolute poverty is
defined in real dollar values, whereas
relative poverty is a comparison of the
highest to the lowest
Jan 28, 2009 IIPM
standard of living at
21
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 Economic predictions and
forecasting

Predictions about the direction of the

United States economy in the short term
and long term are crucial factors in
determining federal government policies,
business decisions, and Federal Reserve
decisions. Several institutions make
economic predictions, including: Global
Insight, and the UCLA Anderson Forecast.
Various state agencies, including the
California Department of Finance.

Jan 28, 2009 IIPM 23

 THANK YOU..

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