Economy of the United States

The United States has the largest national economy in the world, with a GDP for 2006 of 12.98 trillion dollars. The United States has a mixed economy where corporations and other private firms make the majority of microeconomic decisions regulated by government.

Since the end of the Second World War, the US Economy has been characterized by relatively steady growth and low unemployment. In recent years, the primary economic concerns have centered around two areas: the national debt (caused by government deficit spending) and the external debt (caused by a trade imbalance of more imports than exports.)

As of 2006, the gross external debt was nearly $9 trillion dollars or 64% of GDP, which is comparable to other industrial nations. The national debt or the amount of the cumulative government deficits and interest, in 2005 was 64.7% of GDP, also similar to the amount in other large market driven economies.

The national debt, also known as the U.S. public debt and the gross federal debt. is the overall collective sum of yearly federal budget deficits owed by the United States federal government, plus interest. The economic significance of this debt and its potential ramifications for future generations of Americans are controversial issues in the United States.

The borrowing cap debt ceiling as of 2005 stood at 8.18 trillion. In March of 2006, Congress raised that ceiling an additional 0.79 trillion to $8.97 trillion. Congress has used this method to deal with an encroaching debt ceiling in previous years, as the federal borrowing limit was raised in 2002 and 2003.

U.S. liabilities to foreigners are estimated at $10.4 trillion in 2005. This figure rises as long as the US maintains an imbalance in trade, specifically, when the value of imports substantially outweighs the value of exports. It should be noted that this external debt does not, for the most part, represent lending to Americans or the American government, nor is it consumer debt owed to non-US creditors. Rather, the external debt is an accounting entry that largely represents US domestic assets purchased with trade dollars and owned overseas, largely by US trading partners. The external debt is more specifically, and more accurately, known as the “Net International Investment Position (NIIP)”.

There is significant disagreement abort poverty in the United States, particularly over how poverty ought to be defined. Using radically different definitions, two major groups of advocates have claimed variously that the United States has eliminated poverty over the last century; or it has such a severe poverty crisis that it ought to devote significantly more resources to the problem.

Much of the debate about poverty comes from groups who either support welfare programs and government regulation of the market or a market which is regulation free and not bound by a big social safety net. Measures of poverty can be either absolute or relative. Absolute poverty is defined in real dollar values, whereas relative poverty is a comparison of the highest to the lowest standard of living at a particular time period.