U.S. ECONOMY
By
Aishwarya Sankpal
Aman Dubey
Foram Patel
Heena Patel
Vivek Vijayan
(Q.A+ MBA)
U.S. in our mind
Ups & down
Myths & Facts
Production
Economy
Consumption
(Goods &
servives)
Trade
Distribution
The United State
of America
 Federal republic consisting of 50 states and a federal district
 The economic history of the U.S. has its roots in EU colonization in
the 16th, 17th, and 18th centuries.
 Marginal colonial economies grew into 13 small, independent
farming economies, which joined together in 1776 to form the U.S.A.
 In 230 years, U.S. grew to a huge, integrated, industrialized
economy making up nearly a quarter of the world economy.
 Major factors: large unified market, supportive political-legal
system, vast areas of highly productive farmlands, vast natural
resources (timber, coal, iron, and oil), technology, industries, an
entrepreneurial spirit and commitment to investing in material and
human capital.
 U.S. economy is the world's largest single national
economy.
 Nearly $15 trillion a year in goods and services, largest in
the world & most innovative and productive.
 The resulting economy reflects market and individual
choices but is also structured and shaped by politics,
policies and laws.
 Its GDP at purchasing power parity is also the largest of
any single country in the world, approximately a 5th
of global GDP.
 Mixed economy and has maintained a stable overall GDP
growth rate, a moderate unemployment rate, and high
levels of research and capital investment.
As of 2010, the
country
remains the
world's largest
manufacturer,
representing a
fifth of the
global
manufacturing
output.
 About 60% of the global currency reserves have
been invested in the US dollar.
 The New York Stock Exchange is the world's
largest stock exchange by Market capitalization,
Foreign investments made in the US total almost
$2.4 trillion, which is more than twice that of any
other country.
 The U.S. is one of the top-performing economies
in studies such as the Ease of doing Business,
the Global Competitiveness Report, and others.
 The US is ranked first globally in the IT industry
competitiveness index.
 5 largest trading partners:
Canada, china, Mexico, Japan, Germany.
 Abundant natural resources, a well-developed
infrastructure, and high productivity.
 World's third-largest producer of oil and second-largest
producer of natural gas.
 Second-largest trading nation in the world behind China.
 Main industries highly diversified, world-leading, high-
technology innovator, second-largest industrial output in
world; petroleum,steel, motor vehicles aerospace,
telecommunication, chemicals, electronics, food processing,
consumer goods, mining.
Export Capital goods, industrial supplies and materials, consumer goods,
automotive vehicles and components, food, and beverages, fuel oil and
petroleum products, aircraft and components and many more.
American
Revolution
 American demand: Englishmen rights to select
their own representatives to govern and tax them
- Britain refused.
 The American economy proved resilient and able
to support a sustained war (1775-1783)
 Alexander Hamilton (first secretary of the
treasury) achieved Congressional authority to
create the First Bank of the United States in 1791;
the charter lasted until 1811.
Evolution
of
US Economy
 Agriculture was dominant.
 Basically an agrarian society.
 In 1793, Cotton, at small-scale in the South, boomed
following Eli Whitney's invention of the cotton gin.
 Railroads opened up remote areas, drastically cut the cost of
moving freight as well as passenger travel, and stimulated
new industries such as steel and telegraphy, as well as the
profession of civil engineering.
 The railroad became the first large-scale business enterprise
and the model for most large corporations.
The Gilded age (1865-1900)
 Explosion of new discoveries and inventions :
process called as the "Second Industrial Revolution“.
 Coal and oil was found in abundance.
 Large iron ore mines, steel mills opened.
 The "Gilded Age" of the second half of the 19th
century was the epoch of tycoons and saw the
greatest period of economic growth in American
history.
• From 1869 to 1879, the US economy grew at a rate of 6.8% for real
GDP and 4.5% for real GDP per capita.
• The economy repeated this period of growth in the 1880s, in which
the wealth of the nation grew at an annual rate of 3.8%, while the
GDP was also doubled.
• Capital investment also increased tremendously during the 1880s,
increasing nearly 500%.
• Long-term interest rates also declined to 3 from 3.5% for the first
time, reaching the same level. During the period, a series of
recessions happened.
 Panic of 1873 :
New York Stock Exchange
closed for 10 days, of the
country's 364 railroads, 89
went bankrupt, a total of
18,000
businesses
failed
between 1873 and 1875,
unemployment reached 14%
by 1876, during a time which
became known as the Long
Depression.
 The end of the Gilded Age
coincided with the Panic of
1893, a deep depression that
lasted until 1897.
Progressive Era (1890-1920)
 Most political leaders accepted the concept of laissez-
faire, a doctrine opposing government interference in the
economy except to maintain law and order.
 Many acts were enacted such as The Interstate commerce
act, Sherman antitrust act. In 1913,the income tax was
instituted in the United States.
 Electrification in the U.S. started in industry ca. 1900 and
by 1930 about 80% of power used in industry was electric.
Wilson resolved the longstanding debates over tariffs
and antitrust, and created the Federal Reserve, a
complex business-government partnership that to
this day dominates the financial world.
Roaring twenties
(1920-1929)
The Boom was because of
‘’ I LACK PANTS’’
I- Immigration
L-Laissez faire
A-Assembly line
C-Credit
K-Knowledge
P-Position of US in world
A-Advertisement
N-New consumer goods
T-Tarrifs
S-Share confidence
Black Tuesday-October 1929
 In late October 1929, the Wall Street Crash(Black Tuesday) and
the Stock Market Crash was the most devastating in the history
of the U.S., when taking into consideration the full extent and
duration of its fallout.
 The Roaring Twenties, the decade that led up to the Crash, was
a time of wealth and excess.
 Steel production was declining, construction was sluggish, car
sales were down, and consumers were building up high debts
because of easy credit.
 On October 24(Black Thursday), the market lost 11%
of its value at the opening bell on very heavy trading.
 On
October 28(Black Monday),more investors
decided to get out of the market and the slide
continued with a record loss in the Dow for the day of
38.33 points, or 13%.
 The next day (Black Tuesday), October 29, 1929,
about sixteen million shares were traded, and the
Dow lost an additional 30 points, or 12%.
The market had lost over $30 billion in the
space of two days which included $14 billion
on October 29 alone.
DROLL
♯♯
• 1930S THE GREAT DEPRESSION
• ITS RECOVERY
♯♯
• 1939-1940-WWII ENERGISES ECONOMY
• MIXED GROWTH
♯♯
• 1950-A STALE PERIOD
• 1960-AT ITS PEAK
♯♯
• INFLATION OF 1970
• RECESSION OF 1980
THE GREAT DEPRESSION
1930S
 The
terrible, terrible conditions which
occurred in the United States and the rest of
the world in the 1930's are known as the Great
Depression.
 This depression was not only an economic
catastrophe, it was social and political
catastrophes as well.
UNEMPLOYMENT RATE:
3.2% IN 1929
UNEMPLOYME
NT
FALL OF
EXPORTS
AND
IMPORTS
Exports fell but
imports fell as well so
that there was not
much of a change in
net exports
The great
depressionmarked by
INTEREST
RATES
WERE HIGH
25% IN 1930
(DUE TO NO PRODUCTION –
INTURN NO SELLING)
Collapse of
investment
• Declaration of Nationwide bank holidays
• Government undertook a series of emergency measures like
banking and the stock market were reformed; insured private
bank deposits; protected home mortgages; sought to stabilize
industrial and agricultural production;
•
Created programmes for large public works. The parks and forests
program, called the Civilian Conservation Corps, was the first socalled work relief program that provided federally funded jobs
• Created a large-scale temporary jobs program during the winter of
1933–34. The Civil Works Administration employed more than four
million men and women at jobs from building and repairing roads
and bridges, parks, playgrounds and public buildings to creating
art.
WW II Energises Economy
• Despite the world war II raging in world ,this period is
considered as the period of growth for US
• USA was not affected by the war up till the Pearl harbor attack
• Jobless workers were absorbed as trainees.
•
Work on army camps and roads and airfields became a new
focus of the WPA as private employment still lagged predepression levels.
• It was the Japanese attack on Pearl Harbor in December 1941
that brought the United States into World War II sent America’s
factories into full production and absorbed all available workers.
• Not until 1954 that the stock market regained its pre-
Depression levels.
1950s
• The economy of the 1950's
was A RELATIVELY STALE
PERIOD OF TIME. Because it
was much of an uneventful
era, the economy did not
experience any major
problems or breakthroughs
• However, the gradual growth
of the U.S. during this time
led the economy to its peak
in the 60's.
1960s
• In early 1963
inflation was stable,
corporate profits
were at a record
high, and the stock
market had
rebounded, but
unemployment was
still too high at 5.7
percent
Rising
60s
 During the 1960s the United States experienced its longest
UNINTERRUPTED PERIOD OF ECONOMIC EXPANSION IN HISTORY.
 In
the 1960s housing and computer industry overpowered
automobiles, chemicals, and electrically powered consumer durables,
which were the leading sectors in the 1950s.

Big business dominated the domestic economy during this time. In 1962
the five largest industrial corporations accounted for over 12 percent of
all assets in manufacturing. By 1965 General Motors, standard old of
New Jersey and ford had larger incomes than all the farms in the
United States.

America’s overseas investment increased to $49.2 billion in 196
Stagflation 1970s
• Throughout 1970's, the
American economy was
plagued by the
unprecedented combination
of soaring prices, the high
unemployment, and low
economic growth.
• Economists dubbed the
phenomena
"STAGFLATION," A PERIOD
OF RISING PRICES IN A
STAGNANT ECONOMY.
• Americans strated to lag
behind.
rates of inflation
1972 and
• Americans
foundbetween
it
1980 to those of the 1980's and
increasingly
difficult to
1990's
sustain a middle class
lifestyle.
The Oil Crisis Begins

Gas prices suddenly doubled and fueling stations frequently
ran out of gas.

The oil crisis effected almost every sector of the economy .
Coping with the
Energy Crisis
 President Nixon appealed to the nation to
make sacrifices in the name of conserving
energy.

The country was "heading toward the most
acute shortages of energy since World War II.”
 The President asked Americans to reduce air
travel, reduce work and school hours, turn
down thermostats by 6 degrees, and reduce
highway speed limits to conserve energy.
 Nixon also urged the use of coal and nuclear
power rather than the limited commodity of
oil.
 Initiation of a grassroots anti-inflation
campaign, the WHIP INFLATION NOW (WIN)
Recession of 80s
•
In January 1980 the U.S. economy entered a recession that, at the
time, was the most significant since the Great Depression.
•
One of the causes of the early 1980s recession was the Iranian
Revolution of 1979, which sparked a second large round of oil price
increase.
•
More important were Federal Reserve Chairman Paul Volcker’s efforts
to tame inflation through restrictive monetary policy.
•
The 1980-82 recession, which the National Bureau of Economic
Research considers as two separate recessions (one lasting for the first
six months of 1980, the other from July 1981 to November 1982)
•
The American economy experienced a modest recovery beginning in
the summer of 1980 but declined again from July 1981 to November
1982
The 90s
•
The recession of the early 1990s lasted from July 1990 to March 1991. It was
the largest recession since that of the early 1980s
•
From November 1982 to July 1990 the U.S. economy experienced robust
growth, modest unemployment, and low inflation. The "Reagan boom"
rested on shaky foundations, however, and as the 1980s progressed signs of
trouble began to mount.
•
On October 19, 1987 stock markets around the world crashed
•
The early 1990s recession lasted just eight months, conditions improved
slowly thereafter, with unemployment reaching almost 8% as late as June
1992
•
The American housing market presented another sign of weakness, as in the
second half of the 1980s a large number of savings and loan associations
(private banks that specialized in home mortgages) went bankrupt.
2000s
 This has been a tumultuous decade for the United
States
 During the first 10 years of the 21st Century, there
was a major terrorist attack
 A housing meltdown
 A severe economic recession
 Significant downturn in the U.S. stock market
 Unemployment
2007-2009
•Financial innovation in the form of asset
securitization
•Government policies to increase homeownership
•Global imbalances
•Expansionary monetary policy
•Weak regulatory.
THE DOUBLE DIP
DEPRESSION- 2008
After The Great Depression, US witnessed the new
depression/double dip depression of 2008, characterised by;
 manufacturing at its lowest level in 26 years
 1,20,000 jobs being shed a month
 the volatility on Wall Street
 home price plummeting
Companies
lay off
workers
Decrease in
disposable
income
decreased
consumption
falling
personal
income
massive
joblessness
further drop
in prices
companies
cannot
afford to
produce or
sell goods
Industrial
standstill
Factors
1.push toward globalization
2.“free trade” agreements
2013 United States debt-ceiling
2012 budget, which balanced in 2063
2013 budget, which balanced in 2035
On March 21st, the house passed a FY 2014 budget that
would balance the United States budget in 2023.
Early July of 2013
• Short Term Debt Ceiling Increase
•
Medium Term Debt Ceiling Increase
•
Long Term Debt Ceiling Increase
Economic bubble characterised by quickly increasing
property values until they outperform other elements of the
economy and then are followed by a decline in property value.
The US meltdown
3$
6$
4$
5$
MYTHS AND
FACTS
Even though Americans
paid a record $2.7
trillion in federal taxes
in 2012, as a percentage
of the economy, that
amounted to 16%,
below the long-term
average.
The amount of overall debt
in our country continues to
reach new highs every week but it's not at its highest level
in relation to GDP. As of April
2, debt held by the public
was roughly $11.96 trillion,
or 75% of GDP. But federal
debt held by the public as a
percentage of GDP was
higher in the 1940s.
While non-defense and
defense spending are in a
downward trend over
the past 40 years, total
federal spending as a
percentage of GDP is just
off its 2010 peak.
Yes.
Americans
contribute
an
average of almost
$50,000
to
the
country's GDP. That's
higher than the
average contribution
to GDP of any other
nation.
Not as much as
some would think.
In fact no country,
not even china,
owns more than
2.5% of U.S.
assets.
Wages are growing, but
barely. Since the recession,
wages have grown at half
the rate they did from
2000-2007.
FACTS/REALITIES
1.Back in 1980, the U.S. national debt was less than 1 trillion dollars. Today, it is
rapidly approaching 17 trillion dollars...
2. According to the World Bank, U.S. GDP accounted for 31.8 % of all global economic
activity in 2001. That number dropped to 21.6 % in 2011.
3. During Obama's first term, the federal government accumulated more debt than it did
under the first 42 U.S. president combined.
4. If you started paying off just the new debt that the U.S. has accumulated during the Obama
administration at the rate of one dollar per second, it would take more than 184,000 years to
pay it off.
5. Back in 1970, the total amount of debt in the United States (government debt + business debt
+ consumer debt, etc.) was less than 2 trillion dollars. Today it is over 56 trillion dollars.
6. There are less Americans working in manufacturing today, than there was in 1950 even though
the population of the country has more than doubled since then.
4.
Back in 1985, trade deficit with China was approximately 6 million dollars for the
entire year. In 2012, our trade deficit with China was 315 billion dollars. That was the largest
trade deficit that one nation has had with another nation in the history of the world
8. Incredibly, more than 56000 manufacturing facilities in the United States have been
permanently shut down since 2001.
9.Overall, the United States has run a trade deficit of more than 8 trillion dollars with
the rest of the world since 1975.
10. According to the Economic Policy Institute, the United States is losing half a
million jobs to China every single year.
11. Back in 1950, more than 80 % of all men in the United States had jobs. Today, less
than 65 % of all men in the United States have jobs.
12. Small business is rapidly dying in America. At this point only abot 7 % of all nonfarm workers in the United States are self-employed. That is an all-time record
low.
13. According to the U.S. Census Bureau, more than 146 million americans are either
"poor" or "low income".
14. Today, more than a million public school students in the United States are
homeless. This is the first time that has ever happened in history.
15. When Barack Obama first entered the White House, about 32 million Americans were on food
stamps. Now,more than 47 million americans are on food stamps.
16. According to the U.S. Census Bureau, 49 % of all Americans live in a home that receives direct
monetary benefits from the federal government. Back in 1983, less than a third of all Americans
lived in a home that received direct monetary benefits from the federal government.
17. Back in 1965, only one out of every 50 Americans was on Medicaid. Today, one out of every
6 americans is on Medicaid, and things are about to get a whole lot worse. It is being projected
that Obamacare will add 16 million more americans to the Medicaid rolls.
18. As I wrote recently, it is being projected that the number of Americans on Medicare will grow
from 50.7 million in 2012 to 73.2 million in 2025.
 http://kclibrary.lonestar.edu/decade30.html
 http://topics.nytimes.com/top/reference/timestopics/subje
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cts/g/great_depression_1930s/index.html?s=oldest&1950
http://bancroft.berkeley.edu/ROHO/projects/debt/1990sre
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http://elcoushistory.tripod.com/economics1950.html
http://elcoushistory.tripod.com/economics1960.html
http://elcoushistory.tripod.com/economics1970.html
http://bancroft.berkeley.edu/ROHO/projects/debt/1980sre
cession.html