Term Project MicroeconomicsTerm Project Microeconomics

Department: Department: Bachelors of Business Bachelors of Business AdministrationAdministration

Topic: Topic: ‘‘Economic Structure of USA’Economic Structure of USA’

Introduction

• The United States is the world's largest national economy, representing 22% of nominal global GDP and 17% of global GDP.

Capital of USA: Washington DCPresident: Barack ObamaCurrency: US$ (USD)Fiscal year: October 1, 2014 – September 30, 2015GDP rank:1stGDP: $17.5 trillion (2014)

Cont...

• USA is the second-largest trading nation in the world as well as the world's second largest manufacturer, representing a fifth of the global manufacturing output.

• US six largest trading partners are Canada, China, Japan, Germany and South Korea.

• US has abundant natural resources, a well-developed infrastructure, and high productivity.

• US is the world's largest producer of oil and natural gas.

• Of the world's 500 largest companies, 128 are headquartered in the US.

Major Exports of USA Exports:

$1.6 trillion (2013)

Export goodsCapital goods =28%Industrial Supplies and Materials (except oil fuels) = 25%Consumer goods (except automotive) = 12%Automotive Vehicles and Components = 9.4%Food, Animal Feed, and Beverages = 8.6%Fuel Oil and Petroleum Products = 7.6%Aircraft and Components = 6%Other = 4%.

Main export partners  Canada 19%  Mexico 15%  China 7.4%  Japan 4%  United Kingdom 3%(May 2014)

Main industries of US:Petroleum, Steel, Motor Vehicles,

Aerospace, Telecommunication, Chemicals, Electronics, Food

Processing, Consumer Goods, Lumber, Mining e.t.c.

US Exports

Major Imports of USA Imports

$2.3 trillion (2013)

Import goodsConsumer Goods (Except Automotive) = 23%

Capital Goods (Except Computing) = 19%

Industrial Supplies (Except Crude Oil) = 18%

Crude Oil = 14%

Automotive Vehicles And Components = 13%

Computers And Accessories = 5.4%

Food, Feed, And Beverages = 5%

Other = 3%

Main import partners  China 18%  Canada 15%

Mexico 13%Japan 6%Germany 5%

(May 2014)

US Imports

Economic Sectors of USA

• Any national economy can be broadly classified into three productive economic sectors:

Primary Sector Secondary Sector Tertiary Sector

Cont...

• Primary Sector: It involves the harvesting and extraction of natural resources. Industries in the primary sector include agriculture, commercial fishing, mining, and the timber industry.

• Secondary Sector: It includes manufacturing industries such as aerospace, automobile production, the chemical industry, petroleum refining, the pharmaceutical industry and electronics production. It also includes the construction of buildings and highways and utilities such as those that generate and distribute electricity.

Cont...• Tertiary Sector: It includes services such as transportation,

marketing, and retailing of physical goods. It also includes direct services without the distribution of any physical goods, such as consulting, education, technology, administration, and tourism. Tertiary sector is also known as the service sector because it involves the provision of services rather than tangible goods.

Interesting Features of US Economy

• US is an economically developed country.

• US is the back bone of the world economy with a large portion of GDP invested into other countries.

• The US economy has faced a lot of up and downs over 150 years.

• Initially US was dependent of its agriculture sector but now the major strength of the US economy is the industrial sector.

• The economy was built up based on several indigenous reforms by Presidents with the help of economists.

Positive Features of US Economy

• Political stability reduces uncertainty in the markets:

Even with debt ceiling crisis that pushed the country to the brink, U.S. remains a safe haven compared to other nations where ruling parties have been toppled and federal governments head towards delinquency.

Cont...• Little corruption lets businesses operate efficiently:

Corruption takes a massive toll on small businesses overseas; think police and politician payoffs and long procedural hurdles for approval. In Transparency.org's annual rankings of countries, the U.S. placed 22, between Belgium and France. Transparency.org looks at bribery in the public and private spheres and asks both experts and residents to weigh in.

• USAID (United States Agency of International Development):

USAID is US international development program. By USAID, US provides financial aid to less developed and developing nations. Types of aid provided by USAID include disaster relief, technical assistance, poverty alleviation and economic development.

Negative Features of US Economy

• Wages are Falling:

The recession caused a giant drop in consumer demand, but the culprit wasn't just a loss of housing wealth. Wages for most workers are declining. In fact, real median wages fell by about 2.8% between 2009 and 2012. That's bad for workers and bad for the economy.

Cont..• American’s don’t Pay Taxes:

A reported 47% of Americans pay nothing in federal income taxes. This also have negative effects on the economic structure of any country.

• Military Cuts:

US is spending a lot on its military. After 9/11, it’s been 14 years since US military forces are playing a major role in war against terror which has badly affected their economic structure.

How Americans Feel About their Economy?

Conclusion SummaryEconomic growth signals are still positive and consumption is apparently rebounding, while corporate earnings are strong.

Unemployment, Housing, Interest Rates, and Oil all loom as potential caution flags that could reverse the good news story

Government debt and overall debt are not going away as major issues that could reduce long term growth and lead to unpleasant outcomes