Unit 4: an overview of US economy

US Economy


An Overview of the US Economy
• Facts and Figures
• A free enterprise economy
• Economic Sectors
• US Import and Export
• Challenges facing US Economy


Facts and Figures
The world's most powerful economy


Facts and Figures
Main industries:
Petroleum, Steel, Motor vehicles,
Aerospace, Telecommunications,
Chemicals, Electronics, Food
processing, Consumer goods,
Lumber, Mining


Facts and Figures
• World’s leading producer of goods and
services
• World’s leading industrial and
technological products such as
Aluminum, Copper and Sulphur
• Farming is highly merchandized and

commercialized => produce 15% of the
world’s food needs.


Facts and Figures
• Major products are machinery,
automotive products, aircraft and
chemicals.
• Since 1971, the US has imported more
than exported
• There is a shift in production from
manufacturing to services


Facts and Figures
•
•

Labor: 151.8m( includes
unemployed) (2006)
Labor force by occupation:
– managerial and professional
(31.1%)
– technical, sales and
administrative support
(28.6%)
– services (14.1%)
– manufacturing, mining,
transportation, and crafts
(23.7%),

– farming, forestry, and fishing
(2.5%)

•

Unemployment: 4.4%
(October 2006)


US Economy: A Free
Enterprise
American economy: a free
enterprise system, which allows
private business the freedom to
operate for profit with minimum
government interference and
regulation

Adam Smith (1723 – 1790)

Laissez Faire (leave it alone):
individuals, motivated by self
interest, are allowed to pursue
profit freely, the result is good for
all of society


US Economy: A Free
Enterprise
The role of the Government:

In 19th Century: minimum government
intervention

From 1930s, government regulation
exists in many areas of business

Generally, the idea of “free” private
enterprise is strongly supported


US Economic Sectors


Changes in the Economic
Sectors


US Import Export balance


IMPORT
• Imports: $1.727 trillion (2005)
• Main Partners:
– Canada 17%
– Mainland China 16%
– Mexico 11%
– Japan 8%


IMPORT

• Imports goods:
– agricultural products
4.9%
– industrial supplies 32.9%
(crude oil 8.2%)
– capital goods 30.4%
(computers,
telecommunications
equipment, motor vehicle
parts, office machines,
electric power
machinery)
– consumer goods 31.8%
(automobiles, clothing,
medicines, furniture,
toys)


EXPORT
• Export: $927.5bn (2005)
• Main partners:
– Canada 23%
– Mexico 14%
– Japan 6%,
– Mainland China 6%


EXPORT
– agricultural products
(soybeans, fruit, corn)

9.2%
– industrial supplies
(organic chemicals)
26.8%
– capital goods
(transistors, aircraft,
motor vehicle parts,
computers,
telecommunications
equipment) 49.0%
– consumer goods
(automobiles, medicines)
15.0% (2003)


US Favorable Conditions
• Natural resources
• Labor
• Manufacturing and
investment


Natural Resources
• Rich in mineral resources and fertile farm soil.
• A moderate climate.
• Extensive coastlines on both the Atlantic and
Pacific Oceans, as well as on the Gulf of
Mexico.
• Rivers flow from far within the continent, and
the Great Lakes provide additional shipping

access.


Labor
• The promise of high wages brings many
highly skilled workers from around the
world to the United States.
• The number of available workers and,
more importantly, their productivity help
determine the health of an economy.


Manufacturing and investment
• The corporation has emerged as an
association of owners, known as
stockholders, who form a business
enterprise governed by a complex set of
rules and customs.
• American investors and corporations
have influence all over the world.


Challenges facing US
Economy: Budget Deficit


Challenges facing US
Economy: Budget Deficit
BUDGET DEFICIT
More money is spent

than taken in since 1930

INFLATION

HIGH INTEREST
RATE

UNEMPLOYMENT


Challenges facing US
Economy
2008 Economic Crisis:
- High oil price
- High food price
- Global inflation
- Credit crisis
- Unemployment


Stop and Check
Fill in the blank with ONE word or figure:
1. The American economy is described as a
Free Enterprise
_____________
system which allows
private business the freedom to operate for
profit.
2. The founding father of American economic
Adam Smith (1723 –

system philosophy is _____________
1790)


Stop and Check
3. The outstanding features of US
favorable conditions include: Labor,
Manufacturing and investment, and
___________
Natural resources
4. The direct outcomes of US budget
Inflation
deficit since 1930 are: __________,
High interest rate and Unemployment