The US is a market-oriented economy, where private individuals and business firms make most of the decisions, and the federal and state governments buy needed goods and services predominantly in the private marketplace.
US business firms enjoy considerably greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant, lay off surplus workers, and develop new products. At the same time, they face higher barriers to entry in their rivals' home markets than the barriers to entry of foreign firms in US markets.
The American belief in "free enterprise" has not barred a major role for government, however. People in the US rely on government to address matters the private economy overlooks, from education to protecting the environment. And despite their advocacy of market principles, they have used government at times to nurture new industries, and at times even to protect American companies from competition. This is clearly visible from the highly subsidized agriculture in the US.
US firms are at or near the vanguard in technological advances, especially in computers and in medical, aerospace, and military equipment, although their advantage has narrowed since the end of World War II. The onrush of technology largely explains the gradual development of a "two-tier labor market" in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits.
The key essence of US economic structure can thus be summarised by the interactions between the private, public and international sector. As the leading economy in the world, fluctuations in the US economy have had far reaching impact on other economies throughout the globe.
Ever since the 1960s, the US economy has been primarily responsible for absorbing global savings. Despite the challenge from emerging economies, the US remains the most heavily invested-into country in the world, with the stock of direct foreign investments at home worth $2.824 trillion as of 2012. The US is also still the largest investor in the world, investing $4.768 trillion abroad as of 2012.
US Economic Geography
The US is the third largest country in the world, in terms of both land area and population. As the world’s largest economy, many of the world’s key financial and economic institutions reside within the US. The US is home to the world's largest stock exchange, the world's largest gold depository and reserves, and 139 of the world's 500 largest companies, which is almost twice that of any other country.
The US also has an abundance of natural resources. Apart from having the world’s largest proven reserves of coal, 22.6 percent of the world’s total, the US also possesses the 14th largest proven oil reserves and the 6th largest proven natural gas reserves. Other natural resources include copper, lead, molybdenum, phosphates, uranium, bauxite, gold, iron, mercury, nickel, potash, silver, tungsten, zinc, and timber.
Within the US, individual states can often have entirely distinct and unique economies. The list below ranks individual US states according to its GDP in 2010.
Click on the individual states to find out more about their economies.
1. California: $1.936 trillion
2. Texas: $1.153 trillion
3. New York: $1.114 trillion
4. Florida: $754 billion
5. Illinois: $644.2 billion
6. Pennsylvania: $575.6 billion
7. New Jersey: $497 billion
8. Ohio: $483.4 billion
9. Virginia: $427.7 billion
10. North Carolina: $407.4 billion
11. Georgia: $404.6 billion
12. Michigan: $372.4 billion
13. Massachusetts: $377.7 billion
14. Washington: $351.1 billion
15. Maryland: $300 billion
16. Indiana: $267.6 billion
17. Minnesota: $267.1 billion
18. Arizona: $261.3 billion
19. Colorado: $259.7 billion
20. Tennessee: $250.3 billion
21. Wisconsin: $251.4 billion
22. Missouri: $246.7 billion
23. Connecticut: $233.4 billion
24. Louisiana: $213.6 billion
25. Alabama: $174.4 billion
26. Oregon: $168.9 billion
27. South Carolina: $164.3 billion
28. Kentucky: $161.4 billion
29. Oklahoma: $160.5 billion
30. Iowa: $147.2 billion
31. Nevada: $127.5 billion
32. Kansas: $128.5 billion
33. Utah: $116.9 billion
34. Arkansas: $105.8 billion
35. Washington, D.C. (federal district under the authority of the congress): $104.7 billion
36. Mississippi: $98.9 billion
37. Nebraska: $89.6 billion
38. New Mexico: $75.5 billion
39. Hawaii: $68.9 billion
40. West Virginia: $66.6 billion
41. Delaware: $62.7 billion
42. New Hampshire: $61.6 billion
43. Idaho: $54.8 billion
44. Maine: $53.2 billion
45. Rhode Island: $49.5 billion
46. Alaska: $45.6 billion
47. South Dakota: $39.9 billion
48. Wyoming: $38.2 billion
49. Montana: $37.2 billion
50. North Dakota: $33.4 billion
51. Vermont: $26.4 billion
US Population and Labour Force
The US population for 2012 was 314.184 million. In the aftermath of the 2008-2009 recession, thee percentage of working-age adults in the labour force — what's called the participation rate — has fallen to 63.3 percent. Still America has the 3rd largest labour force in the world at 154.9 million people.
The majority (37.3 percent) of the labour force’s occupations are managerial, professional or technical in nature. A further 24.2 percent hold sales or office jobs, 20.3 percent are in either manufacturing, extraction, transportation and crafts, 0.7 percent are in farming, forestry or fishing, and 17.6 percent have jobs in other services.
Unfortunately, the labour force has yet to recover fully from the 2008 financial crisis. Unemployment rates in the US nearly doubled in 2009 from 5.8 percent to 9.283 percent while 2010 saw a further increase to 9.625 percent. 2011 and 2012 saw unemployment rates begin to improve again, 8.925 percent and 8.075 respectively; while in 2013, unemployment is expected to drop again to 7.743 percent.
US Industry Sectors
Agriculture and the industrial sector made up 1.2 percent and 19.1 percent of US’s GDP in 2012 respectively. This percentage can be relatively deceiving. The US is not only the third largest agricultural producer in the world behind China and India, but is also the leading industrial power in the world.
Agriculture is a vital part of US economy and society. According to the last census of agriculture in 2007, there were 2.2 million farms in the US - covering an area of 922 million acres. Farmers are also one of the major political lobbyists in the US as they are primarily responsible for the country’s food demands. Among US agricultural products include wheat, corn, other grains, fruits, vegetables, cotton; beef, pork, poultry, dairy products; fish; and forest products.
The industrial sector on the other hand is highly diversified and technologically advanced; comprising of industries such as petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber and mining. As of 2010, the country remains the world's largest manufacturer, representing a fifth of the global manufacturing output. Due in part to the shale boom in recent year, the U.S. is also the world's third-largest producer of oil and second-largest producer of natural gas.
Finally, services constituted 79.7 percent of the US GDP. The US is home to the largest and most influential financial markets in the world including major stock and commodities exchanges like NASDAQ, NYSE, AMEX, CME, and PHLX. The NYSE alone is more than three times larger than any other stock market in the world.
Read more about the US economy, including industry information, featured analysis and trade statistics below.