Economy of the United States facts for kids

Kids Encyclopedia Facts

The economy of the United States is like a giant machine that produces goods and services for people. It's one of the biggest economies in the world! When we talk about the economy, we mean all the ways people earn money, spend money, and create things. This includes everything from making cars and computers to providing services like teaching and healthcare.

In 2019, the U.S. economy produced about $21.4 trillion worth of goods and services. This amount, called the GDP, is roughly a quarter of the entire world's economic output. The U.S. economy is known for its strong focus on services, like healthcare, education, and technology. It also has a lot of manufacturing, farming, and mining.

Understanding the U.S. Economy
History of the U.S. Economy
Images for kids
See also

Understanding the U.S. Economy

The U.S. economy is a mixed economy. This means it combines elements of both capitalism (where businesses are mostly privately owned) and socialism (where the government plays a role). Most businesses are owned by individuals or companies, but the government also provides important services and sets rules.

How Big is the U.S. Economy?

The United States has the largest national economy in the world. Its total economic output, or GDP, is huge. This means a lot of goods and services are produced and traded within the country. It also means the U.S. plays a very important role in the global economy.

What Makes Up the Economy?

The U.S. economy is made up of many different parts.

Services: This is the biggest part. It includes things like healthcare, education, finance, retail, and technology. Think of doctors, teachers, bankers, and people who work in stores or create apps.
Manufacturing: This involves making things, like cars, airplanes, electronics, and machinery.
Agriculture: This is farming, producing food like wheat, corn, and meat.
Mining: This includes getting natural resources like oil, gas, and minerals from the ground.

Boeing is a major U.S. manufacturer, known for its airplanes.

McDonald's is a well-known U.S. company in the service sector (fast food).

Agriculture, like this wheat harvest in Idaho, is an important part of the U.S. economy.

Key Economic Players

Many different groups help the U.S. economy run.

Consumers: That's us! When people buy things, they help businesses grow.
Businesses: Companies create jobs and produce goods and services.
Government: The government collects taxes and spends money on things like roads, schools, and defense. It also sets rules for businesses.
Banks: Banks help people save money and lend money to businesses and individuals.

The Federal Reserve is the central banking system of the United States.

Jobs and Work in the U.S.

The economy creates millions of jobs for people. The types of jobs available change over time. For example, there are now more jobs in technology and healthcare than there used to be. The U.S. has a large workforce, and many people work in the service industry.

The percentage of the U.S. working-age population employed, 1995–2012.

This chart shows the number of employees per business in the U.S.

How People Earn Money

People earn money in many ways in the U.S. economy.

Wages and Salaries: Most people earn money from their jobs.
Business Profits: People who own businesses earn money from their profits.
Investments: Some people earn money from investments, like stocks or real estate.

The amount of money people earn can vary a lot. This is called income inequality. The government and other groups often discuss ways to make income more fair for everyone.

U.S. real median household income (1984–2018). Median income means the middle income, where half of households earn more and half earn less.

Trade and Global Connections

The U.S. economy is very connected to the rest of the world.

Exports: The U.S. sells many goods and services to other countries. These include airplanes, machinery, and technology.
Imports: The U.S. also buys many goods from other countries, like cars, electronics, and clothing.

This global trade helps the U.S. economy grow and gives consumers more choices.

The Port of Houston is one of the largest ports in the United States, important for global trade.

History of the U.S. Economy

The U.S. economy has changed a lot over time.

Early Days: In the beginning, the economy was mostly based on farming.
Industrial Revolution: In the 1800s, factories and machines became very important. This led to more manufacturing jobs.
20th Century: The U.S. became a global economic leader, especially after World War II. New industries like automobiles and electronics grew rapidly.
Modern Economy: Today, the economy is heavily focused on services and technology.

Washburn and Moen Manufacturing Company in Worcester, Massachusetts, 1876. This shows an early U.S. factory.

Consolidated B-24 Liberators being built at a plant in Fort Worth, Texas, 1943. Manufacturing was very important during World War II.

Steve Jobs and Bill Gates are two famous American entrepreneurs who helped shape the modern technology economy.

Images for kids

Oil wells at Los Angeles, California, 1905
President Donald Trump with key automobile industry leaders, 2017
U.S. cumulative real (inflation-adjusted) GDP growth by US president (from Reagan to Obama).
Number of Businesses by Type (US Census Bureau 2019)
Job growth by US president, measured as cumulative percentage change from month after inauguration to end of term.
Panel chart illustrates nine key economic variables measured annually in 2014–2017. The years 2014–2016 were during President Obama's second term, while 2017 was during President Trump's term. Refer to citations on detail page.
U.S. share of income (pre-tax and after-tax) earned by top 1% households in 1979, 2007, and 2015 (CBO data). The first date (1979) reflects the more egalitarian pre-1980 period, 2007 was the peak inequality of the post-1980 period, and the 2015 number reflects the Obama tax increases on the top 1% along with residual effects of the Great Recession.
U.S. family pre-tax income and net worth distribution for 2013 and 2016, from the Federal Reserve Survey of Consumer Finances.
Aerial view of San Diego suburb
Number in Poverty and Poverty Rate: 1959 to 2016. United States.
Wealth inequality in the United States increased from 1989 to 2013.
Protectionist measures since 2008 by country.
Restaurants and shops in Chinatown, Philadelphia
Percent of U.S. economy from State-owned Enterprises or GSEs
Tennessee in 1897. The U.S. was a leader in the adoption of electric lighting
Quarterly U.S. venture capital investments, 1995–2017
A typical Walmart discount department store (location: Laredo, Texas).
The New York Stock Exchange is the largest stock exchange in the world.
Contributions to Percent Change in Real GDP (1930–1946), source Bureau of Economic Analysis
Contributions to Percent Change in Real GDP (1947–1973), source Bureau of Economic Analysis
Contributions to Percent Change in Real GDP (1974–1990), source Bureau of Economic Analysis
Contributions to Percent Change in Real GDP (1991–2008), source Bureau of Economic Analysis
GDP per capita growth.
Real GDP per capita in the United States
Historical growth of the U.S. economy from 1961–2015
GDP per person in the United States
US Gross Private Domestic Investment and Corporate Profits After Tax as shares of Gross Domestic Product
US share of world GDP (%) since 1980. US share of world GDP (nominal) peaked in 1985 with 32.74% of global GDP (nominal). The second-highest share was 32.24% in 2001. US share of world GDP (PPP) peaked in 1999 with 23.78% of global GDP (PPP). The share has been declining each year since then.
U.S. in global economy
Official U.S. unemployment rate, 1950–2005
United States mean duration of unemployment 1948–2010.
Average annual hours worked
All employees, private industries, by branches
U.S. manufacturing employment
U.S. manufacturing industry's share of nominal GDP
U.S. Change in real income versus selected goods and services v1
Mean Quintile Household Income (1967-2015)
U.S. real median household income, 1967-2014
Real family income indexed to 1973, across the distribution 1947-2014
Real compensation per hour in the U.S. (1947–2021).
Historical graph of real wages in the U.S. from 1964 to 2005.
Median Real Wages by Educational Attainment.png
Productivity and real median family income growth, 1947–2009.
Top 1% fiscal income share
Gini Coefficient for Household Income (1967–2007), source United States Chamber of Commerce
U.S. Income Shares of Top 1% and 0.1% 1913–2013
Income inequality panel – v1
Average tariff rates in USA (1821–2016)
Average tariff rates (France, UK, US)
Average tariff rates for selected countries (1913–2007)
Average tariff rates on manufactured products
U.S. trade balance and trade policy (1895–2015)
Imports vs exports & net imports
Merchandise exports (1870–1992)
U.S. federal effective tax rates by income percentile and component as projected for 2014 by the Tax Policy Center.
CBO estimates of historical effective federal tax rates broken down by income level.
Debt in the United States
Assets of the United States as a fraction of GDP 1960–2008
Liabilities of the United States as a fraction of GDP 1960–2009
Development of U.S. federal government debt ceiling from 1990 to January 2012.
Deficit and debt increases 2001–2016.
U.S. public net debt and the total public debt
"Twin deficit" (1960–2006)