The United States possesses the world’s largest single national economy. The US nominal GDP was estimated to be $16.6 trillion in June of 2013, which is roughly one quarter of the nominal global GDP. The nominal GDP is the market value of all final goods and services from a nation in a year. When a PPP comparison is made adjusting for differences in cost of living, USA comes in first place, a fifth of the world sum. PPP stands for purchasing power parity, and is described as a better indicator of a country’s economic status. The US economy is shaped both by the private sector and the state, but is mainly considered to be a market economy with strong oversight concerning regulation. Markets are the dominant influence in the US economy, where accumulation of capital is the central motive in economic exchanges and interactions. The United States is rich in natural resources, including oil and natural gas. The USA is the world’s third largest producer of oil and is the largest manufacturer on Earth. A majority of global currency reserves are invested in the US dollar (60%,) and foreign direct investments (FDI) are twice higher in the US than any other nation except for China. Foreign direct investment means another country builds new facilities on US soil, as the US is an ” open economy” which is not overly restrictive of such arrangements. Roughly 13% of the US workforce is dependent upon such investments. FDI is one of many paths to a country’s prosperity and economic health. The labor market in America continues to attract immigrants from every country on the planet, and the US has the world’s highest rate of migration. The epic list of superlatives goes on and on, and yet the US economy faces many serious problems.
Many of the economic troubles the US faces are components of the economic cycle, which is not to say they are to be taken lightly, but that they are natural effects of fluctuation over time. The US may suffer minimally from the development of a supercollider such as the Hadron collider in Switzerland instead of the collider that was discontinued in Texas is 1993, but is a small albeit dramatic example of a technology shock which places the US at a disadvantage in a particular category of scientific funding and development. On the other hand, the disaster in Fukushima, Japan in 2011 balances the short term, negative economic impact the European supercollider may have had on the US. The point is not to give a play-by-play of a global tit for tat, but to illustrate uncontrollable economic fluctuation; events the US can do nothing to avoid, and often cannot plan for.
There are economic ills in the US which are within the government and markets’ control. The United States economy is slowly recovering from the 2007 recession; what factors can be mitigated to strengthen the US? What political determinations can fix some of the fiscal woes which are within our reach?
As the number three global producer of oil, it seems to defy reason that the US economy suffers as a result of dependency upon foreign oil. The US consumed 18.6 million barrels of oil per day in 2012 for gasoline, heating oil, jet fuel, and other purposes. Over half of the “foreign oil” imported by the US comes from the western hemisphere, which defies popular wisdom. The consumption of foreign oil has been reduced in the US by factors such as better engine efficiency and changes in consumer behavior. The increased use of domestic biofuels and strong gains in the domestic production of crude oil has loosened the Persian yoke. Continuing the domestic development of electric and biofuel consuming private vehicles must be paired with private marketing and government regulation that will pave the way for their widespread use. Technologies in automobile
navigation will help to wean the American motorist from the prevailing image of the heavy American gas guzzler, and transition to the electric cars that do the driving for you. The US government must ramp up the regulations more sharply to expedite this transition. A second important facet to the issue of American dependence on foreign oil concerns diplomatic relations with Mid East governments. The current administration of the US has made unprecedented
inroads with Iran, which holds the third most proved oil wells on earth, and second most if Canada is excluded for unconventional oil reserves. If the US continues to expand overseas crude oil options while proactively diminishing domestic demand, Americans will achieve exporter status on the dying fossil fuel, and gain the global upper hand.
Another dimension of the economic storm cloud lies in the shrinking middle class, or the growing concentration of wealth at the top of the economic pyramid. The mean household net worth of 1% of Americans is more than $16,000,000, the mean household wealth of the bottom 40% of Americans is less than$-10,000. That means that after credit card, mortgages and other debts are subtracted from a household’s wealth, 40% of Americans are more than $10,000 in debt; their net-worth is less than zero. This economic trend is deepening, so how can the US middle class avoid becoming modern day serfs? Are there political and economic resources that can be used to keep America out of the middle ages?