UNITED STATES

T he United States’ economic freedom score is 76.6, making its

economy the 17th freest in the 2020 Index. Its overall score
has decreased by 0.2 point due primarily to a lower trade freedom
score. The United States is ranked 3rd among 32 countries in the
Americas region, and its overall score is well above the regional and
world averages.

Economic freedom has declined in America over the past decade,

WORLD RANK: REGIONAL RANK: primarily because of excessive government spending and intrusive

17 3 regulation of the health care and financial sectors, although scores have
stabilized in recent years. GDP growth has been good recently as well.
ECONOMIC FREEDOM STATUS: Reckless deficit spending by Congress and the Administration under
MOSTLY FREE both parties explains the weakest Index indicators: government spend-
ing and fiscal health. Approval of the recently renegotiated NAFTA (now
the United States–Mexico–Canada Agreement) should help to ensure
continued growth, and resolution of the U.S.–China trade dispute could
boost trade freedom.

ECONOMIC FREEDOM SCORE

▼ DOWN 0.2 POINT

76.6


0 50 60 70 80 100

REGIONAL AVERAGE
(AMERICAS REGION) 60.0 61.6 WORLD
AVERAGE

HISTORICAL INDEX SCORE CHANGE (SINCE 1995): –0.1

RECENT FREEDOM TREND QUICK FACTS

90

POPULATION: UNEMPLOYMENT:
327.4 million 3.9%
80
76.8 76.6 GDP (PPP): INFLATION (CPI):
75.4 75.1 75.7
$20.5 trillion 2.4%
2.9% growth in 2018
FDI INFLOW:
70 5-year compound
$251.8 billion
annual growth 2.4%
$62,606 per capita PUBLIC DEBT:
105.8% of GDP
60

2016 2017 2018 2019 2020 2018 data unless otherwise noted. Data compiled as of September 2019

BACKGROUND: The United States has one of the world’s wealthiest and most diversified economies.
President Donald Trump sparked relatively robust economic growth by reducing burdensome regulations
and signing a major tax reform bill into law, but deficit spending has continued unchecked. The Administra-
tion’s protectionist trade policies will increasingly be a drag on economic growth if newly applied tariffs are
not reversed. The Democratic Party took control of the House of Representatives in January 2019, dimming
prospects for passage of major legislation affecting economic policy before the 2020 election. Although
services account for about 80 percent of GDP, the U.S. remains the world’s second-largest producer of
manufactured goods and the leader in research and development.

462 2020 Index of Economic Freedom

 WORLD AVERAGE | ONE-YEAR SCORE CHANGE IN PARENTHESES

12 ECONOMIC FREEDOMS | UNITED STATES

RULE OF LAW GOVERNMENT SIZE
(+2.5) (+5.1) (–0.2) (–0.5) (–0.6) (+1.2)

100 100

80 80

70 70

60 60

50 50

81.8 83.7 77.2 74.6 56.5 54.3

0 0
Property Judicial Government Tax Government Fiscal
Rights Effectiveness Integrity Burden Spending Health

Private property rights are widely respected, but the
federal government still owns about 28 percent of all land.
Contracts are enforced effectively. The judiciary functions
independently and predictably, although the judicial
appointments process is subject to increasing politicization.
Corruption does not represent a significant business risk, and
government actively enforces a well-established anticorrup-
tion legislative framework.
The top individual income tax rate is 37 percent, and the top
corporate tax rate is 21 percent. The overall tax burden equals
27.1 percent of total domestic income. Government spending
has amounted to 38.1 percent of the country’s output (GDP)
over the past three years, and budget deficits have averaged
4.0 percent of GDP. Public debt is equivalent to 105.8 percent
of GDP.

REGULATORY EFFICIENCY OPEN MARKETS


(–0.5) (–1.5) (–1.1) (–6.8) (No change) (No change)

100 100

80 80

70 70

60 60

50 50

83.3 87.9 75.5 79.8 85.0 80.0

0 0
Business Labor Monetary Trade Investment Financial
Freedom Freedom Freedom Freedom Freedom Freedom

The legal and political environments generally support
entrepreneurial activity. Tax and regulatory reforms have
pushed the unemployment rate to its lowest level in over 50
years, with unemployment among minority demographic
groups at record lows. However, agricultural subsidies have
been increased to offset the effects of increased tariffs, and
subsidies continue for health care, so-called green energy,
and various forms of corporate welfare.
The total value of exports and imports of goods and services
equals 27.1 percent of GDP. The average applied tariff rate is
2.6 percent, and over 2,000 nontariff measures are in force.
Protectionist policies have created considerable uncertainty
for businesses, adding to the overall cost of trade and
investment. The financial sector, which is among the most
developed in the world, is competitive and stable.

The Heritage Foundation | heritage.org/Index 463