Economic Growth in the United States

America's Economy Issue

With a gross domestic product of $17.5 trillion, the American's economy is the world's largest, but China is closing fast (Bergman 3). In fact, the U.S. economy remains in the doldrums despite having officially recovered from the Great Recession of 2009, but which direction the economy will head next is anyone's guess. This, of course, has not stopped pundits and economics from predicting what is going to happen, and these observations form the issues of interest to this paper. The literature is reviewed below to provide a background and overview of these issues, followed by an examination of recent positive and negative economic trends to determine where the U.S. economy may be headed in the future. A summary of the research and important findings concerning the U.S. economy are provided in the conclusion.

Background and Overview

For the purposes of this analysis, the "American economy" will be discussed in terms of its gross domestic product. A nation's gross domestic product (GDP) is the total value of the production of goods and services adjusted for changes in prices (Bureau of Economic Analysis 2). This means the GDP represents all of the work performed by everyone in the U.S. For an entire year and if personal experience counts for anything, that is a lot of work indeed. The U.S. GDP for the period 1990 through 2013 is shown in Table 1 and depicted graphically in Figure 1 below.

Table 1 -- U.S. GDP -- 1990-2013

Year

Percentage Change

1990

1.9

1991

-0.1

1992

3.6

1993

2.7

1994

4

1995

2.7

1996

3.8

1997

4.5

1998

4.4

1999

4.8

2000

4.1

2001

1.0

2002

1.8

2003

2.8

2004

3.8

2005

3.4

2006

2.7

2007

1.8

2008

-0.3

2009

-2.8

2010

2.5

2011

1.8

2012

2.8

2013

1.9

Source: Based on bar graph at http://www.statista.com/statistics/188165/annual-gdp-growth-of-the-united-states-since-1990/

Figure 1 -- U.S. GDP -- 1990-2013

Source: Based on bar graph at http://www.statista.com/statistics/188165/annual-gdp-growth-of-the-united-states-since-1990/

As can be seen from Table 1 and Figure 1 above, the U.S. economy was horsewhipped following the terrorist attacks of September 11, 2001 and again in 2009 during the Great Recession. Otherwise, given half a chance, the American economy seems to want to grow and these issues are discussed further below.

Positive Economic Trends

In the third quarter of 2014, the U.S. GDP increased at an annual rate of 3.5% based on an "advance" estimate released by the Bureau of Economic Analysis; however, this estimate may be revised once complete data are calculated on November 25, 2014 (Bureau of Economic Analysis 2). This increase was down slightly from a real increase in GDP in the second quarter of 4.6% (Bureau of Economic Analysis 3). This most recent increase in the U.S. economy was attributed to federal, state and local government spending (partly offset by a negative contribution from private inventory investments), exports, positive contributions from personal consumption expenditures (PCE), and nonresidential fixed investment (Bureau of Economic Analysis 3). In addition, imports also decreased during the third quarter 2013, and these represent a subtraction from the calculation of GDP (Bureau of Economic Analysis 3). This good news was balanced by some negative economic trends discussed below.

Negative Economic Trends

The lackluster performance of the economy in recent months has caused some businesses to think twice about new hires and an uncertain energy outlook has constrained new investments in infrastructure. Furthermore, according to U.S. government economists, the consumer price index crept up another 1.3% during the third quarter of 2014, but this was down from a 2% increase in the second quarter of this year (Bureau of Economic Analysis 4).

Conclusion