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Economy of the United States
The United States is a highly developed country with a free market economy and has the world’s largest nominal GDP and net wealth. It has the second-largest by purchasing power parity (PPP) behind China. It had the world’s eighth-highest per capita GDP (nominal) and the ninth-highest per capita GDP (PPP) in 2022. The United States has the most technologically powerful and innovative economy in the world. Its firms are at or near the forefront in technological advances, especially in artificial intelligence, computers, pharmaceuticals, and medical, aerospace, and military equipment. The U.S. dollar is the currency most used in international transactions and is the world’s foremost reserve currency, backed by its economy, stable government, and military, its role as the reference standard for the petrodollar system, and its linked eurodollar and large U.S. treasuries market. Several countries use it as their official currency and in others it is the de facto currency. The largest U.S. trading partners are China, the European Union, Canada, Mexico, India, Japan, South Korea, the United Kingdom, and Taiwan. The U.S. is the world’s largest importer and second-largest exporter. It has free trade agreements with several countries, including the USMCA, Australia, South Korea, Switzerland, Israel and several others that are in effect or under negotiation.
The nation’s economy is fueled by abundant natural resources, a well-developed infrastructure, and high productivity. It has the second-highest total-estimated value of natural resources, valued at US$ 44.98 trillion in 2019, although sources differ on their estimates. Americans have the highest average household and employee income among OECD member states. In 2013, they had the sixth-highest median household income, down from fourth-highest in 2010.
By 1890, the United States had overtaken the British Empire as the world’s most productive economy. It is the world’s largest producer of petroleum and natural gas. In 2016, it was the world’s largest trading country as well as its third-largest manufacturer, representing a fifth of the global manufacturing output. The U.S. not only has the largest internal market for goods, but also dominates the services trade. U.S. total trade amounted to $4.2 trillion in 2018. Of the world’s 500 largest companies, 121 are headquartered in the U.S. The U.S. has the world’s highest number of billionaires, with a total wealth of $3.0 trillion. US commercial banks had $20 trillion in assets as of August 2020. U.S. global assets under management had more than $30 trillion in assets.
The New York Stock Exchange and Nasdaq are the world’s largest stock exchanges by market capitalization and trade volume. Foreign investments made in the U.S. total almost $4.0 trillion, while American investments in foreign countries total over $5.6 trillion. The U.S. economy is ranked first in international ranking on venture capital and global research and development funding. Consumer spending comprised 68% of the U.S. economy in 2018, while its labor share of income was 43% in 2017. The U.S. has the world’s largest consumer market. The nation’s labor market has attracted immigrants from all over the world and its net migration rate is among the highest in the world. The U.S. is one of the top-performing economies in studies such as the Ease of Doing Business Index, the Global Competitiveness Report, and others.
The U.S. economy experienced a serious economic downturn during the Great Recession, defined as lasting from December 2007 to June 2009. However, real GDP regained its pre-crisis (late 2007) peak by 2011, household net worth by Q2 2012, non-farm payroll jobs by May 2014, and the unemployment rate by September 2015. Each of these variables continued into post-recession record territory following those dates, with the U.S. recovery becoming the second-longest on record by April 2018. The United States ranked the 41st highest in income inequality among 156 countries in 2017, and the highest compared to the rest of the Western world.