–Macroeconomics–

GROUP PROJECT
REPORT

Director: Phs. Paya

Country: The USA

Group members:

1. Nguyen Thi Diem Suong (Laura)

2. Vo Thi Tu Vy (Emma)
3. Hoang Quoc Binh (David)
4. Tran Thi Hoang Thao (Bella)

Da Nang, September 16th ,2020

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CONTENT

1. Brief introduction to the USA’s economy.....................................................................3

1.1 US economy in 20th century..........................................................................................3

1.2 The USA’s economy in 2019...........................................................................................3

1.3 US Economic Outlook for 2020 and Beyond...........................................................4

2. How is the United States’ economy doing?..................................................................5

3. Elaborate discussion into one cause: Covid 19 and Government’s policies....6

4. References.................................................................................................................................7

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1. Brief introduction to the USA’s economy

1.1 US economy in 20th century:

The US’s 20th century entrepreneurial culture was defined by a large number of
industrial corporations such as Standard Oil of John D. Rockefeller, U.S Steel of Andrew
Carnegie or General Motors.
(Desjardins, 2017)

In addition, wars were also some of

the contributors that shaped the US
20th century economy. For
example, during the two World
Wars, beside directly entering the
wars, the United States took
advantage of its isolated location
from the war zones to sell weapons
to the joining parties which brought
the country tremendous amount.
(Rockoff, n.d)

The 20th century also experienced

several up and down periods which
laid the ground for the US modern
economy. Some examples to name are the Great Depression in 1929-30 (Kauflin, 2017),
The OPEC oil price shock of 1973 (Bondarenko, n.d), and The Technological Revolution of
the 1980s and 1990s. (Moffatt, 2018).

The United States’ current economic power has to trace its root to The Technological
Revolution of the late 20th century with the appearances of tech giants such as Microsoft
of Bill Gates or Apple of Steve Jobs.

1.2 The USA’s economy in 2019

The United States has maintained its position as the world's largest economy since 1871.
In 2019, The Gross Domestic Product (GDP) value of USA represents 23.6% of the world
economy. (Silver, 2020) The GDP in the USA was worth 21.429 trillion US dollars in 2019.
(Duffin & Feb, 2020) In particular, the real GDP was $19.1 trillion which increased by 2.3
percent, and the nominal GDP was $21.4 trillion in 2019. (Amadeo, 2020 June 6)

Consumer Price Index (CPI) in 2019 was approximately 255.7 and the rate of inflation
was 1.8%. (Federal Reserve Bank Of Minneapolis, n.d). In 2019, consumer prices for all
items rose 2.3 percent compared to 2018. (Bureau of Labor Statistics, 2020)

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The U.S. is the world's largest importer with 13.4% share of global imports equal to $2.6
trillion of goods (Desjardins, 2019), and the second-largest exporter, with exports valued
at 1.64 trillion US dollars. (Duffin, 2020)

The U.S. dollar is the currency most used in foreign transactions and is the largest
reserve currency in the world. As of the fourth quarter of 2019, it constitutes more than
60% of all recognized foreign exchange reserves of the central bank. (Amadeo, 2020
April 15)

Distribution of the workforce across economic sectors in the United States (2019):
agriculture, forestry and fishing accounted for 1.42%, Industry which including
construction represented for 19.18% and Service was the highest with 79.41%. (Plecher,
2020)

1.3 US Economic Outlook for 2020 and Beyond

The COVID-19 pandemic has affected the U.S. economy. Growth declined by 5% in the
first quarter, signaling the onset of the 2020 recession. (Moody's Analytics)

U.S. nominal GDP was $21.534 trillion and real GDP was $18.988 trillion for the first
quarter of 2020. (Moody's Analytics)

Company spending fell by 10.5%. Exports are down by 8.7%. The majority of U.S. exports
are oil and commercial aircraft, and both of these sectors have been influenced by the
Covid-19 pandemic. Imports decreased by 15.5%. Federal government spending
increased by 1.9% and state and local spending increased by 0.2%. (Amadeo, 2020 June
1)

After the loss of 881,000 jobs in March. In April 2020, the US economy lost an
unprecedented 20.5 million job. This led to the U.S. unemployment rate in April 2020
was 14.7%. (Amadeo, 2020 June 8). It is projected that the unemployment rate will
average 9.3% in 2020 and it will drop to 6.5% in 2021 and 5.5% in 2022. Inflation will
average 0.8% in 2020. This figure will rise to 1.6% in 2021 and 1.7% in 2022. (Amadeo,
2020 June 10)

U.S. Economic Outlook 2020, 2021, and 2022 (Amadeo, 2020 June 10)

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2. How is the United States’ economy doing?
Given the current gloomy situation, despite the fact that the US has long been playing the
leading role as the most powerful economy of the world, it is being hard hit by three
major threats which are the severe Covid-19 pandemic, the Trade War with China and
the low oil price.

According to The Balance, since the outbreak of the Covid-19 pandemic, 20.7 million jobs
have been lost, GDP growth was -0,5 in first quarter 2020 which indicates a possible
recession, and interest rates have fallen significantly. Even though 2.5 million of the jobs
previously lost were gained back in May, this slight progress is probably unable to bring
the country’s economy to the normal balance. (Amadeo, 2020 June 5)

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 The second contributor to the US
current economic situation is the
Trade War with China. What is a trade
war? According to The Balance, a trade
war is when a nation imposes tariffs or
quotas on imports and foreign
countries retaliate with similar forms
of trade protectionism. Starting by
accusing Chinese Government of
manipulating its currency, President
Donald Trump administration has
been constantly imposing severe
import tafiffs on many of China’a
major exporting products which were
worth more than $360 billion. In retaliation, China has also levied significant higher
import tariffs on more than $110 billion worth of US products. (BBC news, 2020)

After these moves of the two

governments, not only the two
countries’ residents had to bear higher
prices for imported products but many
of manufacturing firms basing their
productive activities in China
including US ones have been seriously
influenced as well.

Last but not least, another factor that

is posing direct threat to the US economy is the low oil price. According to CNN, thanks to
the boom in production, the US has transformed from an oil consumer to the largest
producer in the world. (Isidore, 2020) In a world where oil plays a vital in the well-being
of every country’s economy, America is one of the most affected nations. After Russia and
the Saudi Arabia failing the reach an agreement on the volume produced and price of oil,
it is the case that the US should be worrying about a new possible economic crisis backed
by the coronavirus pandemic – Saudi Arabia kept producing oil at higher volume and
deceasing oil price while the almost the whole is being paused which means no long
travle, not much fuel used. (Pettinger, 2020)

3. Elaborate discussion into one cause: Covid 19 and Government’s

policies
The first time in history the US economy was pushed into a recession not by human
activity but due to a pandemic. The outbreak of the virus was completely unpredictable

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to everyone. As mentioned earlier, Covid 19 has cause tens of millions of job losses,
hundreds of thousands of deaths and thousands of business shutdowns.

According to a new report from consultancy McKinsey & Company, it could take three
years for the US economy to recover from COVID-19 crisis. ( Oliver, 2020)

As in any previous financial crisis, the Federal Reserve has stepped in immediately to
help consolidate the shaky economy with unprecedented policies. Two main policy tools
the FED has been using are monetary policy and fiscal policy. (Shambaugh, 2020)

Fiscal policy is the way government collects and spends funds that are intended to
stimulate or support the economy. (Lawrence & Weber, 2020, p.167). The Federal Reserve
has cut interest rates down to zero to keep businesses running and residents purchasing.
(Rushe, 2020)

Monetary policies are ones that affect the supply, demand, and value of a nation’s
currency. (Lawrence & Weber, 2020, p.168). The US government has sent out $1000 cheque
to every single citizen with the total amount up to $1tn to not only help them make end
meet but also maintain their purchasing power. (Partington, 2020)

Together with many of other ones, these two policies have been exercised in the hope of
helping the US economy bounce back to its pre-pandemic status.

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 REFERENCE
Desjardins, J. (2017, November 15). America's most valuable companies over the last 100 years.
Retrieved from https://www.businessinsider.com/americas-most-valuable-companies-over-
the-last-100-years-2017-11

Rockoff, Hugh. “US Economy in World War I”. EH.Net Encyclopedia, edited by Robert Whaples.
February 10, 2008. URL http://eh.net/encyclopedia/u-s-economy-in-world-war-i/

Kauflin, J. (2017, September 19). America's Top 50 Companies 1917-2017. Retrieved from
https://www.forbes.com/sites/jeffkauflin/2017/09/19/americas-top-50-companies-1917-
2017/#1768a2851629

Bondarenko, P. (n.d.). 5 Unbelievable Facts About Christopher Columbus. Retrieved from

https://www.britannica.com/list/5-unbelievable-facts-about-christopher-columbus

Moffatt, M. (2018, August 1). How the Rise of Corporations Gave Way to the Fall of the Robber
Baron. Retrieved from https://www.thoughtco.com/us-economic-growth-in-the-20th-century-
1148146

Amadeo, K. (2020, June 6). When to Use Nominal GDP. Retrieved from
https://www.thebalance.com/nominal-gdp-definition-formula-comparison-to-real-4172113

Federal Reserve Bank Of Minneapolis. (n.d.). Consumer Price Index, 1913. Retrieved from
https://www.minneapolisfed.org/about-us/monetary-policy/inflation-calculator/consumer-
price-index-1913-

Duffin, E., & Feb. (2020, February 3). U.S. GDP 1990-2019. Retrieved from
https://www.statista.com/statistics/188105/annual-gdp-of-the-united-states-since-1990/

Silver, C. (2020, April 17). The Top 20 Economies in the World. Retrieved from
https://www.investopedia.com/insights/worlds-top-economies/

Bureau of Labor Statistics (2020, January 16). Consumer Price Index: 2019 in review. Retrieved
from https://www.bls.gov/opub/ted/2020/consumer-price-index-2019-in-review.htm

Desjardins, J. (2019, September 23). Mapped: The World's Biggest Importers in 2018. Retrieved
from https://www.visualcapitalist.com/map-worlds-biggest-importers/#:~:text=

Duffin, E. (2020, May 4). Top exporting countries worldwide 2019. Retrieved from
https://www.statista.com/statistics/264623/leading-export-countries-worldwide/

Amadeo, K. (2020, April 15). How Foreign Exchange Reserves Affect You. Retrieved from
https://www.thebalance.com/foreign-exchange-reserves-3306258

Plecher, H. (2020, February 11). United States - distribution of the workforce across economic
sectors 2019. Retrieved from https://www.statista.com/statistics/270072/distribution-of-the-
workforce-across-economic-sectors-in-the-united-states/

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Moody's Analytics. (n.d.). United States - Nominal Gross Domestic Product. Retrieved from
https://www.economy.com/united-states/nominal-gross-domestic-product

Amadeo, K. (2020, June 1). What Made the U.S. Economy Contract 4.8% in Q1 2020. Retrieved
from https://www.thebalance.com/u-s-gdp-current-statistics-3305731

Amadeo, K. (2020, June 8). Why the 2020 Recession Won't Become a Depression. Retrieved from
https://www.thebalance.com/recession-2020-4846657

Amadeo, K. (2020, June 10). What Will the Economy Do in 2020 and Beyond? Retrieved from
https://www.thebalance.com/us-economic-outlook-3305669

Amadeo, K. (2020, June 5). 6 Facts That Tell You How the Economy Is Really Doing. Retrieved
from https://www.thebalance.com/how-is-the-economy-doing-3306046

BBC news (2020, January 16). A quick guide to the US-China trade war. Retrieved from
https://www.bbc.com/news/business-45899310

Isidore, C. (2020, March 10). Low oil prices could damage the US economy. Retrieved from
https://edition.cnn.com/2020/03/09/business/oil-prices-us-economic-impact/index.html

Pettinger, T. (2020, April 10). Effect of falling oil prices. Retrieved from
https://www.economicshelp.org/blog/11738/oil/impact-of-falling-oil-prices/

Oliver, L. (2020, March 30). It could take three years for the US economy to recover from COVID-
19. Retrieved from https://www.weforum.org/agenda/2020/03/economic-impact-covid-19/

Shambaugh, J. (2020, March 27). COVID-19 and the US economy: FAQ on the economic impact &
policy response. Retrieved from https://www.brookings.edu/blog/up-
front/2020/03/23/covid-19-and-the-u-s-economy-faq-on-the-economic-impact-policy-
response/

Lawrence, A. T., & Weber, J. (2020). Business and society: stakeholders, ethics, public policy. New
York, NY: McGraw Hill.

Rushe, D. (2020, March 16). Federal Reserve cuts interest rates to near zero in attempt to prop
up US economy. Retrieved from
https://www.theguardian.com/business/2020/mar/15/federal-reserve-cuts-interest-rates-
near-zero-prop-up-us-economy-coronavirus

Partington, R. (2020, March 17). US government to give citizens emergency financial aid.
Retrieved from https://www.theguardian.com/world/2020/mar/17/us-government-to-give-
citizens-emergency-financial-aid

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