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The port of Baltimore, like scores of other ports on the East Coast, Gulf Coast, and West Coast, demonstrates the increasing role of trade in the U.S. economy. (© AP Images/Roberto Borea)
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Introduction
When the United States sneezes, an economists' proverb says, the rest of the world catches a cold.
Between 1995 and 2005, the United States accounted directly for one-third of global economic expansion, according to the nonprofit Council on Competitiveness. Between 1983 and 2004, soaring U.S. imports added nearly 20 percent of the increase of the world's exports.
"Developing countries accounted for an increasing share of U.S. exports, 32.8 percent in 1985 versus 47.0 percent in 2006," a Congressional Research Service (CRS) report says. "Developing countries accounted for 34.5 percent of U.S. imports in 1985 and 54.7 percent ... in 2006."
Like a rugged four-wheel-drive vehicle crossing rough terrain, the U.S. economy cruised along in the early 2000s, even while hitting some big rocks: a stock market crash, terrorist attacks, wars in Iraq and Afghanistan, corporate accounting scandals, widespread hurricane destruction, surging energy prices, sliding real estate values.
After a mild recession in March-November 2001, the U.S. economy resumed expanding, an average 2.9 percent during 2002-2006, while price inflation, unemployment, and interest rates remained relatively low.
By various measures the United States remains the world's most productive, competitive, and influential large economy. Yet more and more the U.S. economy is itself influenced by dynamic economies overseas. And it faces challenges both at home and abroad.
But what do we mean by the U.S. economy anyway?
A Number of Numbers to Consider
For better or worse, the U.S. economy is at or near the top in a number of international rankings:
- No. 1 in economic output, called gross domestic product, amounting to $13.13 trillion in 2006. With less than 5 percent of the world's population, at about 302 million, the United States accounts, by different measures, for between 20 and 30 percent of world GDP. The GDP of just one state, California, amounting to $1.5 trillion in 2006, exceeded the GDP in all but about eight countries that year.
- No. 1 in total imports, some $2.2 trillion in 2006, about twice that for the country with the next highest level, Germany.
- No. 2 in exports of goods, $1 trillion in 2006, behind only Germany, although China is predicted to surpass the United States in 2007. No. 1 in exports of services, $422 billion in 2006.
- No. 1 trade deficit, $758.5 billion in 2006, many times that of any other country.
- No. 2 in maritime container traffic in 2006, behind only China.
- No. 1 in external debt, estimated at more than $10 trillion mid-2006.
- No. 1 destination for foreign investment, an inflow of more than $1.5 trillion in 2006.
- No. 1 for inflow of foreign direct investment—businesses and real estate—about $177.3 billion in 2006. No. 1 destination for foreign direct investment by the world's 100 biggest multinational corporations, including corporations from developing countries.
- No. 5 in holdings of reserve assets in 2005 at $188.3 billion, 4 percent of the world's share, behind Japan and China (each with 18 percent), Taiwan and South Korea, and just ahead of Russia. No. 15 in reserves of foreign exchange and gold, about $69 billion in mid-2006.
- No. 1 source of remittances to Latin America and the Caribbean, about three-fourths of the total $62 billion in 2006, from people who migrated out of those regions to find work abroad.
- No. 1 in petroleum consumption, about 20.6 million barrels a day in 2006, and No. 1 in crude oil imports, more than 10 million barrels a day.
- No. 3 in ease of doing business in 2007, after Singapore and New Zealand.
- No. 20 of 163, tied with Belgium and Chile, in Transparency International's 2006 index measuring perceptions about corruption (lowest-numbered economies are viewed as least corrupt).
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