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A funny thing happened on the way to the U.S. recession of 2024: the irrepressible American economy refused to play along. At the start of the year, investors around the world were looking for as many as six quarter-point interest rate cuts from the Federal Reserve to protect economic growth and fight inflation. But inflation has stayed stubbornly above the central bank’s 2% target and the economy keeps growing despite an overnight interest rate target range of 5.25-5.5%, the most among the Group of Seven industrial countries.…..Story continues…
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Source: Forbes
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U.S. nominal GDP was $19.5 trillion in 2017, the largest in the world. Annualized, nominal GDP reached $20.1 trillion in Q1 2018, the first time it exceeded $20 trillion. About 70% of U.S. GDP is personal consumption, with business investment 18%, government 17% (federal, state and local but excluding transfer payments such as Social Security, which is in consumption) and net exports a negative 3% due to the U.S. trade deficit.
Real gross domestic product, a measure of both production and income, grew by 2.3% in 2017, vs. 1.5% in 2016 and 2.9% in 2015. Real GDP grew at a quarterly annualized rate of 2.2% in Q1 2018, 4.2% in Q2 2018, 3.4% in Q3 2018 and 2.2% in Q4 2018; the Q2 rate was the best growth rate since Q3 2014, and the overall yearly GDP growth of 2.9% in 2018 was the best performance of the economy in a decade.
In 2020, the growth rate of the GDP has started to drop as a result of the COVID-19 pandemic, resulting in the GDP shrinking at a quarterized annual growth rate of −5.0% in Q1 2020 and −32.9% in Q2 2020, respectively. As of 2014, China passed the U.S. as the largest economy in GDP (PPP) terms, measured at purchasing power parity conversion rates. The U.S. had the highest GDP (PPP) figures for more than a century prior to that milestone; China has more than tripled the U.S. growth rate for each of the past 40 years.
As of 2017, the European Union as an aggregate had a GDP roughly 5% larger than the U.S., although the former is a political union not a country. The United States’, however, remained the world’s largest economy with the highest nominal GDP. Real GDP per capita (measured in 2009 dollars) was $52,444 in 2017 and has been growing each year since 2010. It grew 3.0% per year on average in the 1960s, 2.1% in the 1970s, 2.4% in the 1980s, 2.2% in the 1990s, 0.7% in the 2000s, and 0.9% from 2010 to 2017.
Reasons for slower growth since 2000 are debated by economists and may include aging demographics, slower population and growth in labor force, slower productivity growth, reduced corporate investment, greater income inequality reducing demand, lack of major innovations, and reduced labor power. The U.S. ranked 20th out of 220 countries in GDP per capita in 2017. Among the modern U.S. Presidents, Bill Clinton had the highest cumulative percent real GDP increase during his two terms, Reagan second and Obama third.
The development of the nation’s GDP according to World Bank:[143] U.S. real GDP grew by an average of 1.7% from 2000 to the first half of 2014, a rate around half the historical average up to 2000. The nation’s private sector employs 85% of working Americans. Government accounts for 14% of all U.S. workers. Over 99% of all private employing organizations in the U.S. are small businesses. The 30 million small businesses in the U.S. account for 64% of newly created jobs (those created minus those lost).
Jobs in small businesses accounted for 70% of those created in the last decade. The proportion of Americans employed by small business versus large business has remained relatively the same year by year as some small businesses become large businesses and just over half of small businesses survive for more than five years. Amongst large businesses, several of the largest companies and employers in the world are American companies.
Amongst them are Walmart, which is both the largest company and the largest private sector employer in the world. Walmart employs 2.1 million people worldwide and 1.4 million in the U.S. alone. There are nearly thirty million small businesses in the U.S.. Minorities such as Hispanics, African Americans, Asian Americans, and Native Americans (35% of the country’s population), own 4.1 million of the nation’s businesses. Minority-owned businesses generate almost $700 billion in revenue, and they employ almost five million workers in the U.S.
Americans have the highest average employee income among OECD nations. The median household income in the U.S. as of 2008 is $52,029. About 284,000 working people in the U.S. have two full-time jobs and 7.6 million have part-time ones in addition to their full-time employments. Out of all working individuals in the U.S., 12% belong to a labor union and most union members work for the government. The decline of union membership in the U.S. over the last several decades parallels that of labor’s share of the economy.
The World Bank ranks the United States first in the ease of hiring and firing workers. The United States is the only advanced economy that does not legally guarantee its workers paid vacation or paid sick days, and is one of just a few countries in the world without paid family leave as a legal right, with the others being Papua New Guinea, Suriname and Liberia. In 2014 and again in 2020, the International Trade Union Confederation graded the U.S. a 4 out of 5+, its third-lowest score, on the subject of powers and rights granted to labor unions.
Similarly, a 2023 study published by Oxfam found that the United States ranks among the worst among developed countries for labor protections. Some scholars, including business theorist Jeffrey Pfeffer and political scientist Daniel Kinderman, posit that contemporary employment practices in the United States relating to the increased performance pressure from management, and the hardships imposed on employees such as toxic working environments, precarity, and long hours, could be responsible for 120,000 excess deaths annually, making the workplace the fifth leading cause of death in the United States.
Real (i.e., inflation-adjusted) median household income, a good measure of middle-class income, was $59,039 in 2016, a record level. However, it was just above the previous record set in 1998, indicating the purchasing power of middle-class family income has been stagnant or down for much of the past twenty years. During 2013, employee compensation was $8.969 trillion, while gross private investment totals $2.781 trillion.
Americans have the highest average household income among OECD nations, and in 2010 had the fourth-highest median household income, down from second-highest in 2007. According to one analysis middle-class incomes in the United States fell into a tie with those in Canada in 2010, and may have fallen behind by 2014, while several other advanced economies have closed the gap in recent years.
The U.S. home ownership rate in Q1 2018 was 64.2%, well below the all-time peak of 69.2% set in Q4 2004 during a housing bubble. Millions of homes were lost to foreclosure during the Great Recession of 2007–2009, bringing the ownership rate to a trough of 62.9% in Q2 2016. The average ownership rate from 1965 to 2017 was 65.3%. The average home in the United States has more than 700 square feet per person (65 square meters), which is 50%–100% more than the average in other high-income countries.
Similarly, ownership rates of gadgets and amenities are relatively high compared to other countries. In February 2019, the Federal Reserve Bank of New York reported that seven million U.S. citizens are three months or more behind on their car payments, setting a record. This is considered a red flag by economists, that Americans are struggling to pay bills in spite of a low unemployment rate.
A May 2019 poll conducted by NPR found that among rural Americans, 40% struggle to pay for healthcare, food and housing, and 49% could not pay cash for a $1,000 emergency, and would instead choose to borrow in order to pay for such an unexpected emergency expense. Some experts assert that the US has experienced a “two-tier recovery”, which has benefitted 60% of the population, while the other 40% on the “lower tier” have been struggling to pay bills as the result of stagnant wages, increases in the cost of housing, education and healthcare, and growing debts.
A 2021 study by the National Low Income Housing Coalition found that workers would have to make at least $24.90 an hour to be able to afford (meaning 30% of a person’s income or less) renting a standard two-bedroom home or $20.40 for a one-bedroom home anywhere in the US. The former is 3.4 times higher than the current federal minimum wage. The USCB reported in September 2023 that incomes fell last year by 2.3% from 2021, which is the third consecutive year incomes have declined.
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