Mumbai: The US is the world’s largest economy, with a GDP of $2.7 trillion. Its tech sector, comprising the big four companies like Apple, Facebook, Google, and Meta, contributed nearly 10 per cent to its total GDP. America’s GDP per capita is $81,624, one of the highest in the world.
A nation’s GDP is a strong indicator of the strength of its currency and economy. Countries with a healthy GDP tend to be more technologically advanced, and the standard of living tends to be much higher. The US and many European countries like France, Britain, and Germany are considered advanced economies due to their technological advancement and higher standards of living. Although China is the world’s second-largest economy, it is still considered a developing nation. China’s status as a developing nation offers it preferential tariff treatment from developed countries, making China’s exports more competitive. Additionally, it uses its developing nation status to justify government subsidies for industries ranging from fishing to tech.
Understanding the full extent of a country’s economy is a complex process. A nation’s economy consists of the production, consumption, and trade of goods and services. No two economies are identical; each is a reflection of the country’s resources, cultures, laws, history, and geography. Understanding an economy’s full scope requires full immersion and a deep interest in it—this is best left to the economists. However, the parts that make up an economy can be explained and understood in simpler terms.
America’s GDP Growth
America’s GDP is the world’s largest. It is the market value of all the products and services created in a year by our economy. America’s tech sector, heavy industries, agriculture, stock markets, banking sectors, and other industries generate a total revenue of $2.7 trillion. GDP is generally a good indicator of how the economy is performing globally and domestically. America’s economy witnessed a negative growth rate of -2.2% in 2020, like many other countries. Since then, it has managed to recover steadily. America’s GDP grew by 2.5 per cent as of May 2023.
Job Creation and Employment Recovery in US
The job crisis has been a major issue in elections. America is facing a job crisis. During the pandemic, more than 120,000 businesses were forced to close temporarily, leading unemployment rates to skyrocket. More than 30 million U.S. workers were unemployed at the peak of the pandemic. Since then, job openings have steadily increased while unemployment rates have slowly declined. Job creation is now bouncing back in America, with employers creating more than 3.1 million jobs in 2023. The unemployment rate in America, which was around 14.8% during the pandemic, has significantly recovered to 4.4% as of July 2024.
US employers added 3.1 million jobs in December 2023, bringing America’s total workforce to 159 million. Employment has risen at the same speed at which it dropped during the pandemic. Since the downturn of April 2020, there has been a six per cent gain in the employment rate. Roughly 28 million jobs have been added to the economy. The average income earned by Americans increased by nearly $8,260. The average income per capita surged from $39,810 in 2019 to $48,060 in 2023.
Inflation in the US: Rising Costs and Economic Impacts
Inflation is the rate at which prices of goods and services increase in the country. Energy, food, and housing costs have risen by 20% since January 2021. The Consumer Price Index (CPI), the official measurement used by the government to measure inflation rates, was around 1.5% in February 2020, before the pandemic. The cumulative increase in prices from before the pandemic to May 2024 is around 19%.
Gas prices increased from $2.60 per gallon in 2019 to $3.52 in 2023, briefly reaching $5.01 in 2022. Housing prices show a similar trend. The rental price and owner’s equivalent of rent increased by 21% between 2010 and 2022. Increases in costs have outpaced wage growth; costs grew by 74%, while wages grew by only 54%. Food prices have also risen considerably, with average food costs increasing by 11.4% since 1979. From 2019 to 2023, the cost of groceries and dining out rose by 25%. In response to rising inflation, the Federal Reserve increased mortgage rates from 3% to 7% over the past two years.
US Income and Demographic Shifts
The livelihood of a family is determined by total earnings minus taxes, plus any government benefits received. The middle 20% of earners have an average income of $63,544. On average, families have an income of $64,417, pay about $21,620 in taxes, and receive up to $25,778 in government benefits, making a net total of $68,152. The bottom 20% make around $31,425 in net income ($2,804 in earnings + $32,921 in government benefits – $4,400 in taxes), while the top 1% make an average net income of $1,615,301 ($2,912,987 in income – $1,313,751 in taxes + $20,063 in benefits).
The number of adults living alone has increased from 13% in 1960 to 29% today, which could indicate that many people find it difficult to start a family. Large proportions of the population are over retirement age and dependent on social security and government services like Medicare. Median incomes have also undergone tremendous shifts. Asian households have the highest median income at around $108,000, while white, non-Hispanics earn $81,100 on average. Hispanics earn $62,800 per year, and the median income for Black families is $52,900. Currently, 54% of families have a retirement plan, compared to 37% in 1989.
Poverty in the US
Earning below a certain income threshold does not alone constitute poverty. Rather, family size, composition, and total earnings determine poverty rates. For instance, a family of four with two children and two adults with a total family income of $30,900 is considered poor. The poverty rate in 2022 was 15%, meaning roughly 38 million people live below the poverty line. More employees are opting for benefits like paid time off, retirement benefits, paid vacation time, family leave, and sick leave. Sick leave participation increased from 67% in 2010 to 80% in 2023, while family leave participation grew from 11% to 27% over the same period.
The economy is always a major issue in US elections. As the 2024 US election approaches, America’s current economic conditions and future growth plans will be hotly debated. Both Trump and Kamala Harris will try to convince Americans of their plans for the country. As is often the case in politics, facts and numbers can be twisted by either side to support their arguments. When this happens, having just the facts can help form better opinions and make more informed decisions.
The US economy remains the world’s largest, driven by its tech sector and steady job creation. Inflation rates are rising, impacting costs and wages for Americans, while GDP growth shows steady recovery from the pandemic. Economy Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
