Статья: U.S. Economy

Статья: U.S. Economy

no evident reason why these same factors will not continue to be the most

important reasons underlying changes in the standard of living in the United

States and other industrialized economies. A comparatively small number of

economists and scientists from other fields argue that limited supplies of

energy or of other natural resources will eventually slow or stop economic

growth. Most, however, expect those limits to be offset by discoveries of new

deposits or new types of resources, by other technological breakthroughs, and

by greater substitution of other products for the increasingly scarce

resources.

Although the U.S. economy will likely remain the world’s largest national

economy for many decades, it is far less certain that U.S. households will

continue to enjoy the highest average standard of living among industrialized

nations. A number of other nations have rapidly caught up to U.S. levels of

income and per capita output over the last five decades of the 20th century.

They did this partly by adopting technologies and business practices that

were first developed in the United States, or by developing their own

technological and managerial innovations. But in large part, these nations

have caught up with the United States because of their higher rates of

savings and investment, and in some cases, because of their stronger systems

for elementary and secondary education and for training of workers.

Most U.S. workers and families will still be better off as the U.S. economy

grows, even if some other economies are growing faster and becoming somewhat

more prosperous, as measured per capita. Certainly families in Britain today

are far better off materially than they were 150 to 200 years ago, when

Britain was the largest and wealthiest economy in the world, despite the fact

that many other nations have since surpassed the British economy in size and

affluence.

A more important problem for the U.S. economy in the next few decades is the

unequal distribution of gains from growth in the economy. In recent decades,

the wealth created by economic growth has not been as evenly distributed as

was the wealth created in earlier periods. Incomes for highly educated and

trained workers have risen faster than average, while incomes for workers

with low levels of education and training have not increased and have even

fallen for some groups of workers, after adjusting for inflation. Other

industrialized market economies have also experienced rising disparity

between high-income and low-income families, but wages of low-income workers

have not actually fallen in real terms in those countries as they have in the

United States.

In most industrialized nations, the demand for highly educated and trained

workers has risen sharply in recent decades. That happened in part because

many kinds of jobs now require higher skill levels, but other factors were

also important. New production methods require workers to frequently and

rapidly change what they do on the job. They also increase the need for

quality products and customer service and the ability of employees to work in

teams. Increased levels of competition, including competition from foreign

producers, have put a higher premium on producing high quality products.

Several other factors help explain why the relative position of low-income

workers has fallen more in the United States than in other industrialized

Western nations. The growth of college graduates has slowed in the United

States but not in other nations. United States immigration policies have not

been as closely tied to job-market requirements as immigration policies in

many other nations have been. Also, government assistance programs for low-

income families are usually not as generous in the United States as they are

in other industrialized nations.

Changes in the make-up of the U.S. population are likely to cause income

disparity to grow, at least through the first half of the 21st century. The

U.S. population is growing most rapidly among the groups that are most likely

to have low incomes and experience some form of discrimination. Children in

these groups are less likely to attend college or to receive other

educational opportunities that might help them acquire higher-paying jobs.

The U.S. population will also be aging during this period. As people born

during the baby boom of 1946 to 1964 reach retirement age, the percentage of

the population that is retired will increase sharply, while the percentage

that is working will fall. The demand for medical care and long-term care

facilities will increase, and the number of people drawing Social Security

benefits will rise sharply. That will increase pressure on government

budgets. Eventually, taxes to pay for these services will have to be

increased, or the level of these services provided by the government will

have to be cut back. Neither of those approaches will be politically popular.

A few economists have called for radical changes in the Social Security

system to deal with these problems. One suggestion has been to allow workers

to save and invest in private retirement accounts rather than pay into Social

Security. Thus far, those approaches have not been considered politically

feasible or equitable. Current retirees strongly oppose changing the system,

as do people who fear that they will lose future benefits from a program they

have paid taxes to support all their working lives. Others worry that private

accounts will not provide adequate retirement income for low-income workers,

or that the government will still be called on to support those who make bad

investment choices in their private retirement accounts.

Political and economic events that occur in other parts of the world are felt

sooner and more strongly in the United States than ever before, as a result

of rising levels of international trade and the unique U.S. position as an

economic, military, and political superpower. The 1991 breakup of the Union

of Soviet Socialist Republics (USSR)—perhaps the most dramatic international

event to unfold since World War II—has presented new opportunities for

economic trade and cooperation. But it also has posed new challenges in

dealing with the turbulent political and economic situations that exist in

many of the independent nations that emerged from the breakup . Some

fledgling democracies in Africa are similarly volatile.

Many U.S. firms are eager to sell their products to consumers and firms in

these nations, and U.S. banks and other financial institutions are eager to

lend funds to support investments in these countries, if they can be

reasonably sure that these loans will be repaid. But there are economic risks

to doing business in these countries, including inflation, low income levels,

high crime rates, and frequent government and company defaults on loans.

Also, political upheavals sometimes bring to power leaders who oppose market

reforms.

The greater political and economic unification of nations in the European

Union (EU) offers different kinds of issues. There is much less risk of

inflation, crime, and political upheaval to contend with in this area. On the

other hand, there is more competition to face from well-established and

technologically sophisticated firms, and more concern that the EU will put

trade barriers on products produced in the United States and in other

countries that are not members of the Union. Clearly, the United States will

be concerned with maintaining its trading position with those nations. It

will also look to the EU to act as an ally in settling international policies

in political and economic arenas, such as a peace initiative in the Middle

East and treaties on international trade and environmental issues.

The United States has other major economic and political interests in the

Middle East, Asia, and around the world. China is likely to become an even

larger trading partner and an increasingly important political power in the

world. Other Asian nations, including Japan, Korea, Indonesia, and the

Philippines, are also important trading partners, and in some cases strong

political and national security allies, too. The same can be said for

Australia and for Canada, which has long been the largest single trading

partner for the United States. Mexico and the other nations of Central and

South America are, similarly, natural trading partners for the United States,

and likely to play an even larger role over the next century in both economic

and political affairs.

It may once have been possible for the United States to practice an

isolationist policy by developing an economy largely cut off from foreign

trade and international relations, but that possibility is no longer

feasible, nor is it advisable. Economic and technological developments have

made the world’s nations increasingly interdependent.

Greater world trade and cooperation offer an enormous range of mutually

beneficial activities. Trading with other countries inevitably increases

opportunities for travel and cultural exchange, as well as business

opportunities. In a very broad sense, nations that buy and sell goods and

services with each other also have a greater stake in other forms of peaceful

cooperation, and in seeing other countries prosper and grow.

On the other hand, global interdependence also raises major

problems—political, economic, and environmental—that require international

solutions. Many of these problems, such as pollution, global warming, and

assistance for developing nations, have been controversial even when

solutions were discussed only at the national level. Often, controversy

increases with the number of nations that must agree on a solution, but some

problems require global remedies. Such problems will challenge the productive

capacity of the U.S. economy and the wisdom of U.S. citizens and their

political leaders.

No nation has ever had the rich supply of resources to face the future that

the U.S. economy has as it enters the 21st century. Despite that, or perhaps

because of it, U.S. consumers, businesses, and political leaders are still

trying to do more than earlier generations of citizens.

XI CHIEF GOODS AND SERVICES OF THE U.S. ECONOMY

The U.S. economy, the largest in the world, produces many different goods and

services. This can be seen more easily by dividing economic activities into

four sectors that produce different kinds of goods and services. The first

sector provides goods that come directly from natural resources: agriculture,

forestry, fishing, and mining. The second sector includes manufacturing and

the generation of electricity. The third sector, made up of commerce and

services, is now the largest part of the U.S. economy. It encompasses

financial services, retail and wholesale sales, government services,

transportation, entertainment, tourism, and other businesses that provide a

wide variety of services to individuals and businesses. The fourth major

economic sector deals with the recording, processing, and transmission of

information, and includes the communications industry.

A Natural Resource Sector

The United States, more than most countries, enjoys a wide array of natural

resources. Agricultural output in the United States has historically been

among the highest in the world. Rich fishing grounds and coastal habitats

provide abundant seafood. Companies harvest the nation’s large reserves of

timber to use in wood products and housing. Major mineral resources—including

iron ore, lead, and copper, as well as energy resources such as coal, crude

oil, and natural gas—are abundant in the United States.

A1 Agriculture

The United States contains some of the best cropland in the world. Cultivated

farmland constitutes 19 percent of the land area of the country and makes the

United States the world’s richest agricultural nation. In part because of the

nation’s favorable climate, soil, and water conditions, farmers produce huge

quantities of agricultural commodities and a variety of crops and livestock.

The United States is the largest producer of corn, soybeans, and sorghum, and

it ranks second in the production of wheat, oats, citrus fruits, and tobacco.

The United States is also a major producer of sugar cane, potatoes, peanuts,

and beet sugar. It ranks fourth in the world in cattle production and second

in hogs. The total annual value of farm output increased from $55 billion in

1970 to $202 billion in 1996. Farmers in the United States not only produce

enough food to feed the nation’s population, they also export more farm

products than any other nation. Despite this vast output, the U.S. economy is

so large and diversified that agriculture accounted for only 2 percent of

annual GDP and employed only 3 percent of the workforce in 1998.

During the 20th century, many Americans moved from rural to urban areas of

the United States, resulting in large population decreases in farming

regions. Even though the number of farms has been declining since the 1930s,

overall production has increased because of more efficient operations. Bigger

farms, operated as large businesses, have increasingly replaced small family

farms. The owners of larger farms make greater use of modern machinery and

other equipment. By the 1990s, farm operations were highly mechanized. By

applying mechanization, technology, efficient business practices, and

scientific advances in agricultural methods, larger farms produce great

quantities of agricultural output using small amounts of labor and land.

In 1999 there were 2,194,070 farms in the United States, down from a high of

6.8 million in 1935. As smaller farms have been consolidated into larger

units, the average farm size in the United States increased from about 63

hectares (about 155 acres) to 175 hectares (432 acres) by 1999.

Cattle production is widespread throughout the United States. Texas leads in

the production of range cattle, which are allowed to graze freely. Iowa and

Illinois are important for nonrange feeder cattle, which are cattle that eat

feed grain provided by cattle farmers. The Dairy Belt continues to be

concentrated in southern Wisconsin but is also prominent in the rural

landscapes of most northeastern states and fairly common in other states,

too. Hog production tends to be concentrated in Iowa, Illinois, and

surrounding states, where hogs are fattened for market. Chicken production is

widespread, but southern states, including Texas, Arkansas, and Alabama,

dominate.

Corn and soybean production is concentrated heavily in Iowa and Illinois and

is also important in surrounding states, including Missouri, Indiana,

Nebraska, and the southern regions of Minnesota and Wisconsin. Wheat is

another important U.S. crop. Kansas usually leads all states in yearly wheat

production. North Dakota, Montana, Oklahoma, Washington, Idaho, South Dakota,

Colorado, Texas, Minnesota, and Nebraska also are major wheat producers.

For more than a century and a half, cotton was the predominant cash crop in

the South. Today, however, it is no longer important in some of the

traditional cotton-growing areas east of the Mississippi River. While some

cotton is still produced in the Old South, it has become more important in

the Mississippi Valley, the Panhandle of Texas, and the Central Valley of

California. Cotton is shipped to mills in the eastern United States and is

exported to cotton textile plants in Japan, South Korea, Indonesia, and

Taiwan.

Vegetables are grown widely in the United States. Outside major U.S. cities,

small farms and gardens, known as truck farms, grow vegetables and some

varieties of fruits for urban markets. California is the leading vegetable

producing state; much of its cropland is irrigated.

Most fruits grown in the United States fall in the categories of midlatitude

and citrus fruits. Midlatitude fruits, such as apples, pears, and plums, grow

in northern states including Washington, Michigan, Pennsylvania, and New

York. Citrus fruits—lemons, oranges, and grapefruits—thrive in Florida,

southern Texas, and southern California. Nuts grow on irrigated land in the

Central Valley of California and in parts of southern California.

Production of specialty crops and livestock has increased in recent years,

particularly along the East and West coasts and in the Southeast. Ranches in

New York and Texas have introduced exotic game, such as emu, fallow deer, and

nilgai and black buck antelope. Deer and antelope meat, known as venison, is

served mainly in restaurants. Specialty vegetable and fruit operations

produce dwarf apples, brown and green cotton, canola, and jasmine rice.

Farmers raise more than 60 specialty crops in the United States for Asian-

American markets, including bean sprouts, snow peas, and Chinese cabbage.

A2 Forestry

In the 1990s, less than 1 percent of the country’s workforce was involved in

the lumber industry, and forestry accounted for less than 0.5 percent of the

nation’s gross domestic product (GDP). Nevertheless, forests represent a

crucial resource for U.S. industry. Forest resources are used in producing

housing, fuel, foodstuffs, and manufactured goods. The United States leads

the world in lumber production and is second in the production of wood for

pulp and paper manufacture. These high production levels, however, do not

satisfy all of the U.S. demand for forest products. The United States is the

world’s largest importer of lumber, most of which comes from Canada.

When European settlers first arrived in North America, half of the land on

the continent was covered with forests. The forests of the eastern and

northern portions of the country were fairly continuous. Beginning with the

early colonists, the natural vegetation was altered drastically as farmers

cleared land for crops and pastures, and cut trees for firewood and lumber.

In the north and east, lumbermen quickly cut all of the valuable trees before

moving on to other locations. Only 10 percent of the original virgin timber

remains. Almost two thirds of the forests that remain have been classified as

commercial resources.

Forests still cover 23 percent of the United States. The trees in the

nation’s forests contain an estimated 7.1 billion cu m (249.3 billion cu ft)

of wood suitable for lumber. Private individuals and businesses, including

farmers, lumber companies, paper mills, and other wood-using industries, own

about 73 percent of the commercial forestland. Federal, state, and local

governments own the remaining 27 percent.

Softwoods (wood harvested from cone-bearing trees) make up about three-

fourths of forestry production and hardwoods (wood harvested from broad-

leafed trees) about one-fourth. Nearly half the timber output is used for

making lumber boards, and about one-third is converted to pulpwood, which is

subsequently used to manufacture paper. Most of the remaining output goes

into plywood and veneer. Douglas fir and southern yellow pine are the primary

softwoods used in making lumber, and oak is the most important hardwood.

About half of the nation’s lumber and all of its fir plywood come from the

forests of the Pacific states, an area dominated by softwoods. In addition to

the Douglas fir forests in Washington and Oregon, this area includes the

famous California redwoods and the Sitka spruce along the coast of Alaska.

Forests in the mountain states of the West cover a relatively small area, yet

they account for more than 10 percent of the nation’s lumber production.

Ponderosa pine is the most important species cut from the forests of this

area.

Forests in the South supply about one-third of the lumber, nearly three-

fifths of the pulpwood, and almost all the turpentine, pitch, resin, and wood

tar produced in the United States. Longleaf, shortleaf, loblolly, and slash

pine are the most important commercial trees of the southern coastal plain.

Commercially valuable hardwood trees, such as gum, ash, pecan, and oak, grow

in the lowlands along the rivers of the South.

The Appalachian Highland and parts of the Great Lakes area have excellent

hardwood forests. Hickory, maple, oak, and other hardwoods removed from these

forests provide fine woods for the manufacture of furniture and other

products.

In the 1990s the forest products industry was undergoing a transformation.

New environmental requirements, designed to protect wildlife habitat and

water resources, were changing forest practices, particularly in the West.

The amount of timber cut on federal land declined by 50 percent from 1989 to

1993.

A3 Fishing

The U.S. waters off the coast of North America provide a rich marine harvest,

which is about evenly split in commercial value between fish and shellfish.

Humans consume approximately 80 percent of the catch as food. The remaining

20 percent goes into the manufacturing of products such as fish oil,

fertilizers, and animal food.

In 1997 the United States had a commercial fish catch of 5.4 million metric

tons. The value of the catch was an estimated $3.1 billion in 1998. In most

years, the United States ranks fifth among the nations of the world in weight

of total catch, behind China, Peru, Chile, and Japan.

Marine species dominate U.S. commercial catches, with freshwater fish

representing only a small portion of the total catch. Shellfish account for

only one-sixth of the weight of the total catch but nearly one-half of the

value; finfish represent the remaining share of weight and value. Alaskan

pollock and menhaden, a species used in the manufacture of oil and

fertilizer, are the largest catches by tonnage. The most valuable seafood

harvests are crabs, salmon, and shrimp, each representing about one-sixth of

the total value. Other important species include lobsters, clams, flounders,

scallops, Pacific cod, and oysters.

Alaska leads all states in both volume and value of the catch; important

species caught off Alaska’s coast include pollock and salmon. Other leading

fishing states, ranked by value, are Louisiana, Massachusetts, Texas, Maine,

California, Florida, Washington, and Virginia. Important species caught in

the New England region include lobsters, scallops, clams, oysters, and cod;

in the Chesapeake Bay, crabs; and in the Gulf of Mexico, menhaden and shrimp.

Much of the annual U.S. tonnage of commercial freshwater fish comes from

aquatic farms. The most important species raised on farms are catfish, trout,

salmon, oysters, and crawfish. The total annual output of private catfish and

trout farms in the mid-1990s was 235,800 metric tons, valued at more than

$380 million. In the 1970s catfish farming became important in states along

the lower Mississippi River. Mississippi leads all states in the production

of catfish on farms.

A4 Mining

As a country of continental proportions, the United States has within its

borders substantial mineral deposits. America leads the world in the

production of phosphate, an important ingredient in fertilizers, and ranks

second in gold, silver, copper, lead, natural gas, and coal. Petroleum

production is third in the world, after Russia and Saudi Arabia.

Mining contributes 1.5 percent of annual GDP and employs 0.5 percent of all

U.S. workers. Although mining accounts for only a small share of the nation’s

economic output, it was historically essential to U.S. industrial development

and remains important today. Coal and iron ore are the basis for the steel

industry, which fabricates components for manufactured items such as

automobiles, appliances, machinery, and other basic products. Petroleum is

refined into gasoline, heating oil, and the petrochemicals used to make

plastics, paint, pharmaceuticals, and synthetic fibers.

The nation’s three chief mineral products are fuels. In order of value, they

are natural gas, petroleum, and coal. In 1996 the United States produced 23

percent of the world’s natural gas, 21 percent of its coal, and 13 percent of

its crude oil. From 1990 to 1995, as the inflation-adjusted prices for these

products declined, the extraction of these fossil fuels declined, increasing

U.S. dependence on foreign sources of oil and natural gas.

The United States contains huge fields of natural gas and oil. These fields

are scattered across the country, with concentrations in the midcontinent

fields of Texas and Oklahoma, the Gulf Coast region of Texas and Louisiana,

and the North Slope of Alaska. Texas and Louisiana account for almost 60

percent of the country’s natural gas production. Today, oil and natural gas

are pumped to the surface, then sent by pipeline to refineries located in all

parts of the nation. Offshore deposits account for 13 percent of total

production. Coal production, important for industry and for the generation of

electric power, comes primarily from Wyoming (29 percent of U.S. production

in 1997), West Virginia (18 percent), and Kentucky (16 percent).

Important metals mined in the United States include gold, copper, iron ore,

zinc, magnesium, lead, and silver. Iron ore is found mainly in Minnesota, and

to a lesser degree in northern Michigan. The ore consists of low-grade

taconite; U.S. deposits of high-grade ores, such as hematite, magnetite, and

limonite, have been consumed. Leading industrial minerals include materials

used in construction—mainly clays, lime, salt, phosphate rock, boron, and

potassium salts. The United States also produces large percentages of the

world’s output for a number of important minerals. In 1997 the United States

produced 42 percent of the world’s molybdenum, 34 percent of its phosphate

rock, 22 percent of its elemental sulfur, 17 percent of its copper, and 16

percent of its lead. Major deposits of many of these minerals are found in

the western states.

B Manufacturing and Energy Sector B1

Manufacturing

The United States leads all nations in the value of its yearly manufacturing

output. Manufacturing employs about one-sixth of the nation’s workers and

accounts for 17 percent of annual GDP. In 1996 the total value added by

manufacturing was $1.8 trillion. Value added is the price of finished goods

minus the cost of the materials used to make them. Although manufacturing

remains a key component of the U.S. economy, it has declined in relative

importance since the late 1960s. From 1970 to 1995 the number of employees in

manufacturing declined slightly from 20.7 million to 20.5 million, while the

total U.S. labor force grew by more than 46.2 million people.

One of the most important changes in the pattern of U.S. industry in recent

decades has been the growth of manufacturing in regions outside the Northeast

and North Central regions. The nation’s industrial core first developed in

the Northeast. This area still has the greatest number of industrial firms,

but its share of these firms is smaller than in the past. In 1947 about 75

percent of the nation’s manufacturing employees lived in the 21 Northeast and

Midwest states that extend from New England to Kansas. By the early 1990s,

however, only about one-half of manufacturing employees resided in the same

region. Since 1947, the South’s share of the nation’s manufacturing workers

increased from 19 to 32 percent, and the West’s share grew from 7 to 18

percent.

In the North, manufacturing is centered in the Middle Atlantic and East North

Central states, which accounted for 38 percent of the value added by all

manufacturing in the United States in 1996. Located in this area are five of

the top seven manufacturing statesa—New York, Ohio, Illinois, Pennsylvania,

and Michigan—which together were responsible for approximately 27 percent of

the value added by manufacturing in all states. Important products in this

region include motor vehicles, fabricated metal products, and industrial

equipment. New York, New Jersey, and Pennsylvania specialize in the

production of machinery and chemicals. This area bore the brunt of the

decline in manufacturing’s value of national output, losing a total of

800,000 jobs from the early 1980s to the early 1990s.

In the South the greatest gains in manufacturing have been in Texas. The most

phenomenal growth in the West has been in California, which in the late 1990s

was the leading manufacturing state, accounting for more than one-tenth of

the annual value added by U.S. manufacturing. California dominates the

Pacific region, which specializes in the production of transportation

equipment, food products, and electrical and electronic equipment.

B1a International Manufacturing

United States industry has become much more international in recent years.

Most major industries are multinational, which means that they not only

market products in foreign countries but maintain production facilities and

administrative headquarters in other nations. In the late 1990s, giant U.S.

corporations began a wave of international partnerships, with U.S. companies

sometimes merging with foreign companies.

Beginning in the early 1980s, U.S. companies increasingly produced component

parts and even finished goods in foreign countries. The practice of a company

sending work to outside factories to reduce production costs is called

outsourcing. Foreign outsourcing sends production to countries where labor

costs are lower than in the United States. One of the first methods of foreign

outsourcing was the maquiladora (Spanish for “mill”) in Mexican border

towns. Manufacturers built twin plants, one on the Mexican side and one on the

United States side. Companies in the United States sent partially manufactured

products into Mexico where labor-intensive plants finished the product and sent

it back to the United States for sale. Outsourcing to Mexico became more

widespread after the North American Free Trade Agreement went into effect in

1994. Firms in the United States also outsource to many other nations,

including South Korea, Indonesia, Malaysia, Jamaica, and the Philippines.

In the 1990s, few products were made entirely within the United States.

Although a product may be fabricated in the United States, some component

parts may have been produced in foreign countries. Despite outsourcing and

the international operations of multinational firms, the United States is

still a major producer of thousands of industrial items and has a comparative

advantage over most foreign countries in several industrial categories.

B1b Principal Products

Ranked by value added by manufacturing, in 1996 the leading categories of

U.S. manufactured goods were chemicals, industrial machinery, electronic

equipment, processed foods, and transportation equipment. The chemical

industry accounted for about 11.1 percent of the overall annual value added

by manufacturing. Texas and Louisiana are leaders in chemical manufacturing.

The petroleum and natural gas produced and refined in both states are basic

raw materials used in manufacturing many chemical products.

Industrial machinery accounted for 10.7 percent of the yearly value added by

manufacture. Industrial machinery includes engines, farm equipment, various

kinds of construction machinery, computers, and refrigeration equipment.

California led all states in the annual value added by industrial machinery,

followed by Illinois, Ohio, and Michigan.

Factories in the United States build millions of computers, and the United

States occupies second place in the world in the production of electronic

components (semiconductors, microprocessors, and computer equipment).

Electronic equipment accounted for 10.5 percent of the yearly value added by

manufacturing, and it was one of the fastest growing manufacturing sectors

during the 1990s; production of electronics and electric equipment increased

by 77 percent from 1987 to 1994. High-technology research and production

facilities have developed in the Silicon Valley of California, south of San

Francisco; the area surrounding Boston; the Research Triangle of Raleigh,

Chapel Hill, and Durham in North Carolina; and the area around Austin, Texas.

In addition, the United States has world leadership in the development and

production of computer software. Leading software producers are located in

areas around Seattle, Washington; Boston, Massachusetts; and San Francisco,

California.

Food processing accounted for about 10.2 percent of the overall annual value

added by manufacturing. Food processing is an important industry in several

states noted for the production of food crops and livestock, or both.

California has a large fruit- and vegetable-processing industry. Meat-packing

is important to agriculture in Illinois and dairy processing is a large

industry in Wisconsin.

Transportation equipment includes passenger cars, trucks, airplanes, space

vehicles, ships and boats, and railroad equipment. This category accounted

for 10.1 percent of the yearly value added by manufacturing. Michigan, with

its huge automobile industry, is a leading producer of transportation

equipment.

The manufacture of fabricated metal and primary metal is concentrated in the

nation’s industrial core region. Iron ore from the Lake Superior district,

plus that imported from Canada and other countries, and Appalachian coal are

the basis for a large iron and steel industry. Pennsylvania, Ohio, Indiana,

Illinois, and Michigan are leading states in the value of primary metal

output. The fabricated metal industry, which includes the manufacture of cans

and other containers, hardware, and metal forgings and stampings, is

important in the same states. The primary metals industry of these states

provides the basic raw materials, especially steel, that are used in making

metal products.

Printing and publishing is a widespread industry, with newspapers published

throughout the country. New York, with its book-publishing industry, is the

leading state, but California, Illinois, and Pennsylvania also have sizable

printing and publishing industries.

The manufacture of paper products is important in several states,

particularly those with large timber resources, especially softwood trees

used to make most paper. The manufacture of paper and paperboard contributes

significantly to the economies of Wisconsin, Alabama, Georgia, Washington,

New York, Maine, and Pennsylvania.

Other major U.S. manufactures include textiles, clothing, precision

instruments, lumber, furniture, tobacco products, leather goods, and stone,

clay, and glass items.

B2 Energy Production

The energy to power the nation's economy—to provide fuels for its vehicles

and furnaces and electricity for its machinery and appliances—is derived

primarily from petroleum, natural gas, and coal. Measured in terms of heat-

producing capacity (British thermal units, or Btu), petroleum provides 39

percent of the total energy consumed in the United States. It supplies nearly

all of the energy used to power the nation’s transportation system and heats

millions of houses and factories.

Natural gas is the source of 24 percent of the energy consumed. Many

industrial plants use natural gas for heat and power, and several million

households burn it for heating and cooking. Coal provides 22 percent of the

energy consumed. Its major uses are in the generation of electricity, which

uses more than three-fourths of all the coal consumed, and in the manufacture

of steel.

Waterpower generates 4 to 5 percent of the nation’s energy, and nuclear power

supplies about 10 percent. Both are employed mainly to produce electricity

for residential and industrial use. Nuclear energy has been viewed as an

important alternative to expensive petroleum and natural gas, but its

development has proceeded somewhat more slowly than originally anticipated.

People are reluctant to live near nuclear plants for fear of a radiation-

releasing accident. Another obstacle to the expansion of nuclear power use is

that it is very expensive to dispose of radioactive material used to power

the plants. These nuclear fuel materials remain radioactive for thousands of

years and pose health risks if they are not properly contained.

Some 33 percent of the energy consumed in the United States is used in the

generation of electricity. In 1999 the nation’s generating plants had a total

installed capacity of 728,259 megawatts and produced 3.62 trillion kilowatt-

hours of electricity. Coal is the most common fuel used by electric power

plants, and 57 percent of the nation’s yearly electricity is generated in

coal-fired plants. The states producing the most coal-generated electricity

are Ohio, Texas, Indiana, Pennsylvania, Illinois, West Virginia, Kentucky,

and Georgia.

Natural gas accounts for 9 percent of the electricity produced, and refined

petroleum for 2 percent. The states producing the most electricity from

natural gas are Texas and California. Refined petroleum is especially

important in Florida, New York, and Massachusetts. The leading producers of

hydroelectricity are Washington, Oregon, New York, and California.

Illinois, Pennsylvania, South Carolina, and California have the largest

nuclear power industries.

Petroleum is a key resource for an American lifestyle based on extensive use

of private automobiles and trucks for commerce and businesses. Since 1947,

when the United States became a net importer of oil, annual domestic

production has not been enough to meet the demands of the highly mobile

American society.

In 1970 domestic crude-oil production reached a record high of 3.5 billion

barrels, but this had to be supplemented by imports amounting to 12 percent

of the nation’s overall crude oil supply. Most Americans were unaware of the

dependence of the country on foreign petroleum until an oil embargo imposed

by some Middle Eastern nations in 1973 and 1974 led to government price

ceilings for gasoline and other energy products, which in turn led to

shortages. In 1973 the nation imported about one-fourth of its total supply

of crude oil. Imports continued to rise until 1977, when about half of the

crude and refined oil supply was imported. Imports then declined for a time,

largely because energy-conservation measures were introduced and because

other domestic energy sources such as coal were used increasingly. As of

1997, however, 47 percent of the crude oil needs of the United States were

met by net imports. Energy Supply, World.

The United States consumes 25 percent of the world’s energy, far more than

any other country, despite having less than 5 percent of the world’s

population. The United States also produces a disproportionate share of the

world’s total output of goods and services, which is the main reason the

nation consumes so much energy. In addition, the U.S. population is spread

over a larger area than are the populations in many other industrialized

nations, such as Japan and the countries of Western Europe. This lower

population density in the United States results in a greater consumption of

energy for transportation, as truck, trains, and planes are needed to move

goods and people to the far-flung American citizenry.

As a result of the nation’s high energy consumption, the United States

accounts for nearly 20 percent of the global emissions of greenhouse gases.

These gases—carbon dioxide, methane, and oxides of nitrogen—result from the

burning of fossil fuels, and they can have a harmful effect on the

environment. C Service and Commerce Sector

By far the largest sector of the economy in terms of output and employment is

the service and commerce sector. This sector grew rapidly during the last

part of the 20th century, creating many new jobs and more than offsetting the

slight loss of jobs in manufacturing industries. In 1998 commerce and service

industries generated 72 percent of the GDP and employed 75 percent of the

U.S. workforce. Most of these jobs are classified as white collar, and many

require advanced education. They include many high-paying jobs in financing,

banking, education, and health services, as well as lower-paying positions

that require little educational background, such as retail store clerks,

janitors, and fast-food restaurant workers.

C1 Service Industries The service sector is extremely diverse. It

includes an assortment of private businesses and government agencies that

provide a wide spectrum of services to the U.S. public. Services industries

can be very different from each other, ranging from health-care providers to

vacation resorts to automobile repair shops. Although it would be almost

impossible to list every kind of service industry operating in the United

States, many of these businesses fall into one of several large service

categories.

C1a Banking and Financial Services

In 1995 the U.S. financial market had a total of 628,500 institutions, which

employed 7.0 million people. These institutions included investment,

commercial, and savings banks; credit unions; mortgage banks; insurance

companies; mutual funds; real estate agencies; and various holdings and

trusts.

Banks play a central role in any economy since they act as intermediaries in

the flow of money. They collect deposits and distribute them as loans,

allowing depositors to save for future consumption and allowing borrowers to

invest. In 1998 the United States had 10,481 insured banks and savings

institutions with a total of 84,123 banking offices. Because of mergers and

closures, the number of banks steadily declined in the 1980s and 1990s while

the number of bank offices increased. Combined assets of insured banks and

savings institutions totaled $5.44 trillion in 1998.

Banking in the 1990s was a highly competitive business, as banks offered a

variety of services to attract customers and sought to stem the flow of

investors to brokerage houses and insurance firms. Large banks in the United

States, in terms of assets, include Chase Manhattan Corporation, Citibank,

Morgan Guaranty Trust, and Bankers Trust, all headquartered in New York City;

Bank of America, headquartered in San Francisco; and NationsBank,

headquartered in Charlotte, North Carolina.

In 1998 the United States had 1,687 savings and loan associations (SLAs),

with combined assets of $1.1 trillion. SLAs are similar to banks, in that

they accept deposits from customers, but SLAs focus primarily on the housing

and building industries by making loans to home buyers. The industry was

substantially restructured in the late 1980s and early 1990s after some

prominent SLAs became insolvent largely because of falling real estate prices

in some parts of the country.

In addition, a host of other professions offer financial services to

individuals and corporations. Insurance companies provide insurance as well

as a variety of other services, including deposit accounts, pension

management, mutual funds, and other investments. Stockbrokers, investment

experts, pension managers, and personal financial consultants advise

consumers on investing money. In addition, corporate finance managers,

accountants, and tax consultants make recommendations on financial planning

to businesses and individuals.

C1b Travel and Tourism

One of the largest service industries in the United States is travel and

tourism. In 1997, individual U.S. citizens took 1.3 billion trips within the

United States to destinations that were at least 100 miles (equivalent to 160

km) from home. In increasing numbers, domestic and foreign travelers are

visiting theme parks, natural wonders, and points of interest in major

cities, and the convention business is booming. New York City is a popular

destination, and tourism is a mainstay of the economies of California,

Florida, and Hawaii.

In recent decades, visitors from overseas have become an increasingly

important part of the U.S. tourism business. In 1970 about 2.3 million

overseas visitors came to the United States, spending $889 million. By 1997

the number of overseas visitors—chiefly from western Europe, Japan, Latin

America, and the Caribbean—was 48 million. Millions of visitors from Canada

and Mexico also cross the border every year. Estimated annual expenditures in

the United States by Canadian travelers totaled $6 billion, and spending by

Mexicans was $5 billion.

America’s historic sites and national parks draw many visitors. In 1998, 287

million visits were made to the more than 350 areas administered by the

National Park Service. Millions of people each year visit the national

monuments, buildings, and museums in the Washington, D.C., area. More than 14

million visits are made annually to Golden Gate National Recreation Area in

the San Francisco region. More than 19 million people per year travel on the

Blue Ridge Parkway in North Carolina and Virginia, and about 6 million visit

the Natchez Trace Parkway in Mississippi, Alabama, and Tennessee. Located

within a day’s drive from most parts of the eastern United States, Great

Smoky Mountains National Park is the most popular national park in the United

States, receiving nearly 10 million visitors annually.

C1c Transportation

Transportation-related businesses are an important part of the service

industry. Trucks, railroads, and ships transport goods to markets across the

country. Commercial airlines, railroads, bus companies, and taxis move

tourists and commuters to their destinations. The U.S. Postal Service and a

number of private carriers deliver goods as well as mail to consumers. The

U.S. transportation network spreads into all sections of the country, but the

web of railroads and highways is much denser in the eastern half of the

United States, where it serves the nation’s largest urban, industrial, and

population concentrations.

As of 1996 the 10 largest railroad companies in the United States operated 72

percent of tracks. Takeovers and mergers among the major private railroad

companies were common during the 1980s and 1990s. Amtrak (the National

Railroad Passenger Corporation), a federally subsidized organization,

operates almost all the intercity passenger trains in the United States. It

carried 20.2 million passengers in 1997. Although rail passenger travel has

declined in importance during the 20th century, some U.S. cities still

maintain extensive subways or commuter railways, including New York City,

Washington, D.C., Chicago, and the San Francisco-Oakland area of California.

During the early decades of the 20th century, motor vehicle transport

developed as a serious competitor of the railroads, both for passengers and

freight. Federal aid to states for highway construction began with the

passage of the Federal-Aid Road Act of 1916.

The federal aid program was greatly expanded in 1956 when the government

began an ambitious expansion of the Interstate Highway System, a 74,165-km

(46,084-mi) network of limited-access highways that connects the nation’s

principal cities. This carefully designed system enables motorists to drive

across the country without encountering an intersection or traffic signal. It

carries about 20 percent of U.S. motor-vehicle traffic, though it accounts

for just over 1 percent of U.S. roads and streets. The system is designed for

safe, efficient driving, with gentle curves, easy grades and long sight

distances. Entering and exiting the highway system is permitted only at

planned interchanges.

Air transport began to compete with other modes of transport in the United

States after World War I (1914-1918). The first commercial flights in the

United States were made in 1918 and carried small amounts of mail. Passenger

service began to gain importance in the late 1920s, but air transport did not

become a leading mode of travel until the advent of commercial jet craft

after World War II. By the 1990s a growing number of Americans flew for

personal and business travel, in part because of the need to cover long

distances and in part because they like to get to their destinations quickly.

In 1997 airlines in the United States carried 598.1 million passengers, the

vast majority of whom were domestic travelers.

By the end of the 20th century, large and small airports across the nation

formed a network providing air transportation to individual travelers. The

nation had 5,129 public and 13,263 private airports in 1996. The largest

airports in the United States by passenger arrivals and departures are

William B. Hartsfield International Airport near Atlanta, Georgia; Chicago-

O’Hare International Airport in Illinois; Dallas-Fort Worth Airport in Texas;

and Los Angeles International Airport in California.

The United States has a relatively small commercial shipping fleet. In 1998

only 473 vessels of 1,000 gross tons and larger were registered in the United

States. Only 56 percent were in use; most of the remainder formed part of a

government-owned military reserve fleet. However, many American ship owners

register their vessels in foreign countries such as Liberia and Panama, where

crew wages, taxes, and operating costs are lower.

In terms of the number of ships docking, New Orleans, Louisiana, is the

busiest port in the nation; each year it handles more than 6,000 vessels.

Other leading ports include Los Angeles-Long Beach, California; Houston,

Texas; New York, New York; San Francisco-Oakland, California; Miami, Florida;

and Philadelphia, Pennsylvania. Crude petroleum accounts for 22 percent of

the waterborne tonnage of the United States. Petroleum products make up 18

percent. Coal accounts for 14 percent, and farm products for 14 percent.

The inland waterway network of the United States has three main

components—the Mississippi River system, the Great Lakes, and the coastal

waterways. Some 66 percent of the annual water freight traffic is on the

Mississippi River and its tributaries, 17 percent is on the Great Lakes, and

most of the remainder is on the coastal waterways. A major thoroughfare of

the coastal waterways is the Intracoastal Waterway, a navigable, toll-free

shipping route extending for about 1,740 km (about 1,080 mi) along the

Atlantic Coast and for about 1,770 km (about 1,100 mi) along the Gulf of

Mexico coast. About 45 percent of the total annual traffic on all coastal

waterways travels on the Gulf Intracoastal Waterway, about 30 percent is on

the Atlantic Intracoastal Waterway, and about 25 percent is on Pacific Coast

waterways.

Most goods in the United States travel by railroad and truck, which compete

vigorously for freight transport. In 1996, 38 percent of all United States

freight moved by rail and about 27 percent traveled by truck. However, other

modes of transportation more easily handle special freight items. An

additional 20 percent of all freight, by volume, moved through pipelines,

mainly oil and natural gas pipelines originating in Texas and Louisiana with

destinations in the Midwest and Northeast. Another 16 percent, mainly bulk

commodities like coal, grain, and industrial limestone, moved by barge on

inland waters.

C1d Government

Federal, state, and local governments provide a sizeable portion of services

delivered in the nation. In 1996, government workers made up 4 percent of all

workers and together produced 12 percent of GDP. Government services include

items as such Social Security benefits, national defense, education, public

welfare programs, law enforcement, and the maintenance of transportation

systems, libraries, hospitals, and public parks.

The government sector in the U.S. economy has increased dramatically in size

during the 20th century. Federal revenues grew from less than 5 percent of

total GDP in the early 1930s to more than 20 percent by the late 1990s. Much

of this growth took place during two time periods. In the 1930s, following

the economic downturn of the Great Depression, U.S. president Franklin D.

Roosevelt instituted sweeping social programs designed to provide basic

financial security to individuals and families. Many of these programs, such

as unemployment insurance and Social Security payments to retirees, have

remained in place since then. During the 1960s, U.S. president Lyndon B.

Johnson instituted a series of programs designed to fight poverty, promote

education, and provide basic medical coverage for less-affluent Americans. In

addition, during the last half of the 20th century, government expenditures

increased for medical care and national defense as a result of technological

advances. The cost of transportation construction also rose as the growing

population demanded more and better highway systems.

C1e Entertainment

Another leading industry is the entertainment business. Motion picture

production has been centered in Hollywood, California, since the early

decades of the 20th century, when the budding motion picture industry

discovered that the warm climate and sunny skies of southern California

provided ideal conditions for film production. Other entertainment industries

include theater, which tends to be located in larger urban areas,

particularly New York City, and television, with major networks operating out

of the New York City area. .

C2 Commerce The 1990s have been years of unrivaled prosperity in

the United States, with per capita GDP reaching $30,450 by 1998. This high

quality of life results partly from a rapid expansion of commerce in the

years following World War II.

C2a Domestic Trade

Convenience is the key to consumer markets in the United States, whether it

is fast food, movie theaters, clothing, or any of hundreds of different types

of consumer goods. Products are being delivered to citizens in a more

efficient manner, as industries and business firms have decentralized to more

closely fit the distribution of population. Malls have sprung up in suburban

areas, making the downtown department store obsolete in many smaller cities.

Manufacturers also market their goods directly to customers in factory outlet

malls. Prices are often lower in these outlets than in regular retail stores.

Customers often travel hundreds of miles to shop at larger factory outlet

malls. At the other end of the spectrum, mail order catalogs and Internet

sites have made it possible for many consumers to purchase products directly

from companies by mail or using personal computers.

Wholesalers and retailers carry on most domestic commerce, or trade, in the

United States. Wholesalers buy goods from producers and sell them mainly to

retail business firms. Retailers sell goods to the final consumer. Wholesale

and retail trade together account for 16 percent of annual GDP of the United

States and employ 21 percent of the labor force.

Wholesale establishments conducted aggregate annual sales of $3.2 trillion in

1992. The leading type of wholesale business is the distribution of groceries

and related products, which accounts for 16 percent of all wholesale

activity. Next in rank are motor-vehicle parts and supplies; petroleum and

petroleum products; professional and commercial equipment, and machinery,

equipment, and supplies. Wholesalers tend to be located in large urban

centers that enable them to distribute goods over wide sections of the

nation. The New York City metropolitan area is the country’s leading

wholesale center. It serves as the national distribution center for a variety

of goods and as the main regional center for the eastern United States. Other

leading wholesale centers include Los Angeles, the main center for the

western part of the United States; Chicago; San Francisco; Philadelphia;

Houston; Dallas; and Atlanta.

In the mid-1990s retail establishments in the United States had aggregate

annual sales of $2.2 trillion. Automotive dealers, with 23 percent of the

total yearly retail trade, and food stores, with 18 percent, are the leading

retailers. The volume of retail sales is directly related to the number of

consumers in an area. The four leading states in annual retail

sales—California, Texas, Florida, and New York—are also the four most

populous states.

C2b Foreign Trade

The United States is the world’s leading trading nation, with total

merchandise exports amounting to $683 billion, and imports to $944.6 billion.

Despite its massive size, large population, and economic prosperity, the

United States economy can provide a higher quality of life for consumers and

more opportunity for businesses by trading with other nations. Foreign, or

international, trade enables the United States to specialize in producing

those goods that it is best suited to make given its available resources. It

then imports products that other nations can make more efficiently, lowering

prices of these goods for U.S. consumers.

Nonagricultural products usually account for 90 percent of the yearly value

of exports, and agricultural products account for about 10 percent. Machinery

and transportation equipment make up the leading categories of exports,

amounting together to one-third of the value of all exports. Other leading

exports include electrical equipment, chemicals, precision instruments, and

food products. Beginning in the mid-1970s, the nation’s imports of petroleum

from the Middle East and manufactured goods from Canada and Asia (especially

Japan) created a trade imbalance.

D Information and Technology Sector

By the end of the 20th century, many technological innovations had been

introduced in the United States. Communications satellites orbited the earth,

computers performed day-to-day functions in many businesses, and the Internet

provided instant information on most aspects of U.S. life via computer.

Developments in communications and technology have transformed many aspects

of daily life in the United States, from improvements in kitchen appliances

to advances in medical treatment to television broadcasts that are

transmitted live via satellite from around the world.

An increasing number of job opportunities are opening in fields related to

the research and application of new technology. Entirely new industries have

emerged, such as companies that build the equipment used in space

explorations. In addition, technology has opened new opportunities for

investment and employment in established industries, such as those that

manufacture medicines and machines used in the detection and treatment of

diseases and individuals who market and sell products via the Internet.

D1 Communications

The communications systems in the United States are among the most developed

in the world. Television, radio, newspapers, and other publications, provide

most of the country’s news and entertainment. On average there are two radios

and one television set for every person in the United States. Although the

economic output of the communications industry is relatively small, the

industry has enormous importance to the political, social, and intellectual

activity of the nation. Most communication media in the United States are

privately owned and operate independently of government control.

The Federal Communications Commission must license all radio and television

broadcasting stations in the United States. In 1997, 1,285 television

broadcasters were in operation. All states had television stations, and more

than 40 percent of the stations were concentrated in nine states: Texas,

California, Florida, New York, Pennsylvania, Ohio, Illinois, Michigan, and

North Carolina. A rapidly growing number of U.S. households (estimated at 64

million in 1997) subscribed to cable television. An estimated 98.3 percent of

U.S. households had at least one television set. Telephone communication

changed as cellular phones allowed people to communicate via telephone while

away from their homes and businesses or while traveling. There were 69

million cellular phones in use in 1998.

There were 1,489 daily newspapers published in the United States in 1998, 8

fewer than the year before. Daily newspapers had a circulation of approximately

60.1 million copies in 1998. The top daily newspapers in the United States

according to circulation were the Wall Street Journal (published in New

York City), USA Today (published in Arlington, Virginia), the New

York Times, and the Los Angeles Times, each with a circulation in

excess of 1 million. Other leading newspapers included the Washington Post

, the New York Daily News, the Chicago Tribune, the Detroit

Free Press, the San Francisco Chronicle, the Chicago Sun-Times

, the Dallas Morning News, the Boston Globe, and the

Philadelphia Inquirer.

Nearly 21,300 periodicals were published in 1997. These ranged from specialized

journals reaching only a small number of professionals to major newsmagazines

such as Time, with a circulation of 4.1 million a week, and

Newsweek, with a circulation of 3.2 million a week. Other mass publications

with vast audiences included the weekly TV Guide, reaching 13.2 million

readers, and the monthly Reader’s Digest, with a circulation of 15.1

million copies.

D2 Technology

One of the most far-reaching technological advances of the late 20th century

took place in the field of computer science. Computers developed from large,

cumbersome, and expensive machines to relatively small and affordable

devices. The development of the personal computer (PC) in the 1970s made it

possible for many individuals to own computers and allowed even small

businesses to use computer technology in their operations. The U.S. Bureau of

the Census estimates that jobs in the computer industry are growing at the

fastest rate of any employment area, with job openings for computer

specialists expected to double from 1996 to 2006.

The Internet began in the 1960s as a small network of academic and government

computers primarily involved in research for the U.S. military. Originally

limited to researchers at a handful of universities and government

facilities, the Internet quickly became a worldwide network providing users

with information on a range of subjects and allowing them to purchase goods

directly from companies via computer. By 1999, 84 million U.S. citizens had

access to the Internet at home or work. More and more Americans were paying

bills, shopping, ordering airline tickets, and purchasing stocks via computer

over the Internet.

This article was written by Michael Watts, with the exception of the Chief

Goods and Services of the U.S. Economy section, which he reviewed.

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