The U.S. Economy: The World's Largest

What makes the United States the world's largest economy, its main strengths, and the challenges it faces.

The United States has the world’s largest economy measured at market exchange rates, producing roughly a quarter of global output with only about 4 percent of the world’s population. Its size and influence shape the whole world economy.

Sources of strength

A huge single market of over 330 million relatively high-income consumers, with common rules and language.
Innovation: world-leading universities, research institutions and technology companies.
Deep capital markets: large stock and bond markets and venture capital make it easier for companies to raise money.
Natural resources: abundant land, farmland, oil and gas.
Immigration: a long history of attracting workers, entrepreneurs and scientists from around the world.
The dollar: the world’s main reserve currency, which lets the U.S. borrow cheaply and gives it financial influence.

Structure

Services dominate the U.S. economy, including health care, finance, technology, retail and professional services. Manufacturing remains large in absolute terms but employs a much smaller share of workers than in the past. Agriculture employs a tiny share of workers but makes the U.S. one of the world’s largest food exporters.

Challenges

Inequality: income and wealth inequality are among the highest in rich countries.
Health care costs: the highest in the world as a share of GDP.
Public debt: federal debt has grown to around the size of the whole economy.
Regional divides between booming cities and struggling former industrial areas.
Political polarisation, which can make policy unpredictable.

Productivity per worker

American workers produce more output per worker than those in most other rich countries, partly because they work longer hours and partly because productivity growth, especially in technology, has been faster than in Europe and Japan in recent decades. This productivity is a key reason U.S. average incomes are so high.

Thinking a rich country means everyone is rich

The U.S. has very high average incomes, but also significant poverty and inequality. Averages hide wide differences between regions, groups and individuals.

Key takeaways

The U.S. produces about a quarter of world output with about 4 percent of its people.
A large market, innovation, deep capital markets, resources, immigration and the dollar are strengths.
Services dominate the economy.
Inequality, health costs, public debt, regional divides and polarisation are challenges.