What the Economy Produces
Today, the U.S. economy is in the midst of its second radical economic transformation, following a 19th-century shift from agriculture to manufacturing and a 20th-century shift from manufacturing to services and information, a change that has continued and accelerated in the first decade of the 21st century.
And yet, the United States still produces more farm and factory goods than most other countries, even while the proportion of workers engaged in those sectors shrinks.
In the recession year 2009, the U.S. economy, measured as real (inflation-adjusted) gross domestic product (GDP), amounted to $14.3 trillion. Although this reflected a decrease of 2.4 percent from 2008, the U.S. GDP was still more than a third higher than the next biggest economy, China's (measured by the purchasing power of the two countries' currencies, not by official exchange rates).
That represented:
.. $10.1 trillion in personal spending by consumers,
.. plus $1.6 trillion in private investment in homes and businesses,
.. plus $2.9 trillion by federal, state and local governments,
.. minus a $392.4 billion international deficit (reflecting mostly an excess of imports over exports).
Viewing GDP from the perspective of producing goods and services, private industry accounted for 86.4 percent of the value added in 2009, and different levels of government accounted for the rest.
Private-sector production of goods accounted for 19.6 percent of GDP as follows:
.. Manufacturing, 11.0 percent.
.. Construction, 4.1 percent.
.. Utilities, 1.9 percent.
.. Mining, 1.6 percent.
.. Agriculture, forestry, fishing and hunting, 1.0 percent.
Private-sector production of services accounted for 66.8 percent of GDP:
.. Real estate, 13.0 percent.
.. Professional and business services, 12.1 percent.
.. Finance and insurance, 8.4 percent.
.. Health care and social assistance, 7.3 percent.
.. Retail trade, 5.9 percent.
.. Wholesale trade, 5.6 percent.
.. Information (including broadcasting and telecommunications, publishing, motion pictures, sound recordings, and data processing), 4.4 percent.
.. Accommodation and food services, 2.9 percent.
.. Transportation and warehousing, 2.8 percent.
.. Private education, 1.1 percent.
.. Arts, live entertainment, and recreation, 1.0 percent.
.. Other private services, 2.5 percent.
Governments produce mostly services, including infrastructure, not many goods. The federal government accounted for 4.4 percent of GDP, and state and local governments, 9.2 percent, including public education.
Agriculture's share of the U.S. economy has dropped steadily for centuries. Farmers and farm workers, who in 1810 made up about 72 percent of the work force, accounted for less than 2 percent in 2010. A 2007 survey counted 2,204,792 U.S. farms. Of these, 125,000 big farms accounted for 75 percent of farm production (measured as revenue).
The United States remains the world's second biggest producer of crops and livestock, behind only China and ahead of India, Brazil and Russia. The top U.S. agricultural commodities in 2009 were cattle, $43.8 billion; maize, $42 billion; soybeans, $30.1 billion; dairy products, $24.3 billion; and broiler chickens, $21.8 billion.
Manufacturing's share of the U.S. economy peaked in 1953 at about 28 percent and has dropped since then to 11 percent in 2009; yet U.S. manufacturing's global share of value added - the difference between the final sales price of all the world's factory goods and the cost of producing those goods - has slipped little from its 1980 level of 22 percent.
In 2008 the four largest U.S. industries - chemicals, computers and electronic products, fabricated metal products and food - accounted for 44 percent of U.S. factory output.
Increased productivity has allowed fewer factories and factory workers to maintain the United States' level of manufactured output. Manufacturing workers now produce about three times more per person than they did in the early 1970s and about twice as much as in the mid-1980s. Today, factory workers account for 8 percent of the U.S. work force compared with 26 percent in 1953.
U.S. manufacturing has long faced strong competition from industrialized European economies and Japan and now faces even more challenges from rapidly emerging economies.
The United States was still the top producer of factory goods (measured by value added) in 2009, ahead of China, according to economic forecasting firm IHS Global Insight, which predicted that China would surpass the United States in a few years.
It added, however, that while China excels at manufacturing relatively low-tech consumer products - such as textiles, apparel and appliances - the United States specializes in high-tech products such as aircraft, machine tools, medical equipment and electronic media devices.
American manufacturers have responded to rising competition and higher labor costs through such strategies as moving some operations abroad, purchasing foreign parts and components and concentrating on higher-value products where innovation offers a competitive advantage.
Since the 1950s, the services sector has dominated the U.S. economy. Even after the 2009 financial crisis, finance, insurance and real estate accounted for more than 21 percent of GDP. In 2009, of the total U.S. full-time and part-time work force of 137 million people, private goods-producing industries employed accounted for 15 percent of employment; private services-producing industries, 67 percent, and federal, state, and local governments, 18 percent.
On average, American workers made $43,460 in wages in 2009. Farmers and ranchers made about average wages, $42,710; computer hardware engineers, $101,410; elementary school teachers, $53,150; surgeons, $219,770; security guards, $26,430; barbers and hairdressers, about $27,000; lawyers, $129,020; cashiers, $19,030; truck drivers, $39,260, and models, $36,420.
Today, income is distributed less equally in the United States than in other large industrialized countries. The households with the 5 percent highest income earners received about 21.5 percent of all income in 2009, while the 20 percent lowest received about 3.4 percent.
"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 CIA World Factbook says. "Since 1975, practically all the gains in household income have gone to the top 20 percent of households."
Political leaders are struggling to identify the best ways to develop a better-educated work force that can thrive in the current labor market.
(This is a product of the Bureau of International Information Programs, U.S. Department of State)
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