United States - Overview
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The United States is the most powerful economy in the world. Nevertheless, it was the first to suffer from the consequences of the financial crisis in 2009. The country experienced the worst recession since the crisis of the 1930s, the economy shrank by 2.6% in 2009. Thanks to the government’s large-scale budget and monetary stimulus plan, which among other issues, stimulated household consumption, the economy recovered in 2010, but since then, it has been struggling to take off. In 2013, the growth rate of GDP was 1.6%. In the autumn of 2013, due to a political disagreement between the Democrats and Republicans, the Federal administration remained paralyzed by the debates related to the increase of the debt ceiling. This issue was used by the right-wing Republican party in order to eradicate the health reforms. The Federal state stopped operating for several days in October, until the Republicans, facing the risk of failing to issue payments, ended up by signing the authorization to raise the debt ceiling. This shutdown represented a loss of USD 17.6 billion to the American state.
President Obama, who won a clear second-term majority in the 2012 elections after a campaign which focused on defending the middle classes, has called for supporting the economic recovery. The 2013 fiscal year budget aimed to allocate federal resources to key sectors in order to ensure economic growth and balance taxation in favor of the middle class. Therefore, priority is given to education, innovation, research and development, green energies and infrastructures. A balanced plan to reduce the budget deficit was also launched. In early 2013, Democrats and Republicans agreed on tax increases. Since the financial crisis, regulation and supervision of financial markets are also on the agenda. Population aging also brings challenges in terms of health-care spending. Following the crisis of 2009, the Fed has been supplying large sums of liquidity into the economy every month, its share of the GDP has gone up from 5% to 20% between 2006 and 2013. Since mid-2013, the Fed has been trying to reduce these amounts without weakening the recovery. In September a slight attempt was made and it created a wave of panic in the markets. Finally, the Fed decided to continue its usual supply which can eventually create speculative financial bubbles. In 2013, many financial organizations were sanctioned for the roles they played in the sub-prime crisis. Lastly, in July 2013, negotiations began for a free-trade agreement between the European Union and the United States.
The global financial crisis provoked a high increase of unemployment, which has been reduced to 7.3% in 2013. This figure reflects more the unemployed people who have given up searching for a job than a real increase of job creation. The number of persons who have stopped looking for a job is at a record level and it concerns an increasing number of young people. In addition, social inequalities have been increasing since the 1980s. Lastly, the opposition might end up paying for the Federal shutdown during the mid-term elections in 2014.
The American agricultural sector is without a doubt the biggest in the world. It is characterized by high productivity and by the use of modern technologies. The United States is one of the major producers of corn, soy, beef and cotton. California alone produces more than 12% of the country's total agricultural production. Nevertheless, agriculture only accounts for 1% of the American GNP.
The United States is a highly industrialized country. The industrial sector contributes to almost one-fourth of the GDP and includes a large variety of activities. The most significant are the manufacturing of electric and electronic machinery, chemical products, industrial machinery, the food industry and automobile sectors. It is also the world leader in aerospace and pharmaceutical industries. The abundance of natural resources has turned the United States into a leader in the production of several minerals and allows it to maintain a diversified production. It is thus the largest world producer of liquid natural gas, aluminum, electricity and nuclear energy. It is the third largest oil producer in the world and, after having extracted it for several years, the shale gas has also been developed on a large scale.
The American economy is essentially based on services. The tertiary sector accounts for more than three-fourths of the GDP and of the country's workforce.
Foreign trade overview
In general, the country has reduced its trade barriers and it coordinates the world economic system. The United States is convinced that trade promotes economic growth, social stability, and democracy in each individual country and also helps to promotes better international relations. Nevertheless, trade represents less than 30% of the country’s GDP. The United States is the world's largest importer and second largest exporter of goods and the largest importer and exporter of commercial services. As part of the 2010 economic stimulus plan, the administration adopted a policy of promoting exports, with the aim of doubling exports in the next five years.
The U.S. trade balance is structurally very negative. As an effect of the economic crisis, the reduction in imports also reduced the deficit; however, with the economic recovery the deficit grew larger in 2011. In 2013, the trade deficit was partially reabsorbed due to a slight revival in exports and a decrease in energy expenses. In 2013, imports decreased from the first time since 2009
The main trade partners of the United States are the countries of NAFTA (North American Free Trade Agreement composed of the United States, Mexico and Canada), China and the European Union. Since July 2013, the United States started the negotiations to sign a free-trade agreement with the European Union.
After the FDI flows dropped in 2009 due to the financial crisis which weakened the global economy, their inflows recovered in 2010-2011, but then, they slowed down again in 2012 and 2013. The United States is the world’s number one foreign investor and it remains in the first global rank in terms of receiving FDI inflows. In 2012, FDI reached USD 166 billion. The country offers a predictable and transparent juridical system, highly developed infrastructures and an access to the world’s most lucrative consumer market. Consequently, the country remains the world’s largest economic power, it holds the first place in international finance and is the third most populated country in the world. The United States ranks 4th out of 189 countries according to the classification Doing Business 2014 issued by the World Bank in relation to the quality of its business climate.