The American Revolution

An Analysis of the Economy of USA

GROUP -6
Important People
Nishank Kesari
Narayan Soore
Palak Yadav
Parinita A
Pravin Patel
Prince Yadav
Priyanshi Sanghi
Kalawati Hembram
 WHY AMERICA?
Global Leader: World's largest economy, influencing
global markets and trade flows.
Market Diversity: Diverse industries, from tech to
agriculture, offering broad insights.
Policy Hub: Central bank (Fed) and government policies
have a significant global impact.
Data Availability: Extensive, reliable economic data
readily accessible.
Financial Sophistication: Well-developed financial
markets, providing depth of analysis.
Currency Influence: The US dollar is used as a reserve
currency, affecting exchange rates and investment
decisions.
Benchmarking Tool: Compare the performance of other
economies against the US benchmark.
Dynamic Innovation: Hub for technological
advancements, shaping future economic trends.
CURRENT
TRENDS
$23.34
7.1% 3.5%
trillion

As of Q3 2023 GDP Inflation Rate Unemployment

$6.27 -$783.1 $15.57

trillion billion trillion

Govt. Spending Net Exports Consumption

GDP Analysis
The Gross Domestic
Product (GDP) of the
United States is a crucial
indicator of the nation's
economic health,
measuring the total market
value of all final goods and
services produced within its
borders annually.
Analyzing the last 50 years
of US GDP reveals
fascinating trends,
fluctuations, and turning
points in the American
economy.
GDP Analysis (continued)

US GDP has increased substantially over the past 50 years, from $463 billion in 1973 to an
estimated $25.46 trillion in 2022, marking a staggering 54-fold nominal increase.

This growth, however, wasn't uniform. There were periods of rapid expansion like the 1980s and
1990s, followed by slower phases and even recessions like the early 2000s and the Great
Recession of 2008.
Key Events and Turning Points:
1973 Oil Crisis: The oil crisis triggered a period of stagflation, with high inflation and low economic
growth.
1980s Boom: The Reagan era saw deregulation, tax cuts, and increased defense spending, leading
to a period of strong economic growth.
Dot-com Bubble: The late 1990s witnessed a surge in technology stocks and investments, followed
by a dramatic burst in 2000.
Great Recession: The 2008 financial crisis triggered the worst recession since the Great
Depression, with severe job losses and economic contraction.
COVID-19 Pandemic: The pandemic caused a sharp economic downturn in 2020, followed by a
rebound in 2021 and 2022.
Inflation Analysis
The inflation rate in the USA over the
past 50 years has seen various changes
due to global events and economic
cycles. Here’s a brief analysis:
Business Cycle Impact: The natural
rise and fall of economic growth that
occurs over time.

Federal Reserve’s Role: It uses

monetary policy to achieve its target
rate of 2% inflation.

Recent Trends: In 2022, in the wake

of the COVID-19 pandemic, inflation
reached 8.5%, its highest rate since
1982.
Budget defecit Analysis
1970s and 1980s:
The U.S. experienced budget deficits during parts of the 1970s and
early 1980s.
The Reagan administration in the 1980s implemented tax cuts and
increased defense spending, contributing to larger deficits.
1990s:
The latter part of the 1990s saw budget surpluses, primarily
attributed to a booming economy and increased tax revenues.
The surplus years were under President Bill Clinton.
Early 2000s:
The budget moved back into deficit during the early 2000s, partly
due to tax cuts and increased spending, including on wars in
Afghanistan and Iraq.
Mid-2000s:
The deficit continued to widen during the mid-2000s.
2008 Financial Crisis:
The global financial crisis in 2008 led to increased government
spending to stimulate the economy, contributing to a significant
budget deficit.
2010s:
The early part of the decade saw large deficits, but they gradually
decreased over the course of the 2010s.
2020s (up to 2022):
The COVID-19 pandemic led to substantial government spending
to address health and economic challenges, resulting in a
significant increase in the budget deficit in 2020 and beyond.
NET EXPORTS ANALYSIS
Exports of goods and services represent the value of all goods and
other market services provided to the rest of the world. They
include the value of merchandise, freight, insurance, transport,
travel, royalties, license fees, and other services, such as
communication, construction, financial, information, business,
personal, and government services. They exclude compensation of
employees and investment income (formerly called factor services)
and transfer payments. Data are in current U.S. dollars.

U.S. exports for 2021 was $2,539.65B, a 18.2% increase from

2020.
U.S. exports for 2020 was $2,148.62B, a 15.36% decline
from 2019.
U.S. exports for 2019 was $2,538.45B, a 0.01% increase
from 2018.
U.S. exports for 2018 was $2,538.09B, a 6.27% increase
from 2017.
CONSUMPTION EXPENDITURE ANALYSIS
Total US consumption has nearly doubled since 1973, outpacing population
growth. This translates to a substantial rise in per capita consumption.

Driving factors:

Population growth: Increased population naturally leads to higher

aggregate consumption.
Rising incomes: Average real wages have increased, leading to more
disposable income for spending.
Technological advancements: New technologies have created new
products and services, expanding consumption possibilities.
Globalization: Access to cheaper imports and broader product variety
fueled consumption.

Impact of Major Events:

Oil crisis of 1973: Spike in energy prices led to temporary decline in

consumption and increased awareness of energy dependence.
2008 recession: Significant drop in consumption across various
categories, followed by slower recovery.
COVID-19 pandemic: Initial decline in consumption due to lockdowns
and economic uncertainty, followed by shifts towards online shopping
and increased spending on home goods.
USA Unemployment Rate - A 50-Year View

Explore the fluctuations and resilience shown in 5 decades of US

unemployment. The average rate since 1948 has been 5.71%,
ranging from a record low of 2.5% in 1953 to a record high of
14.7% in 2020t
50 Years of US Government Spending - A Soaring Trajectory

Witness the dramatic rise in US government

spending over 5 decades, skyrocketing from
$52 billion in 1948 to over $8 trillion in 2023,
representing a 154-fold increase
Case: US housing bubble
and Global Financial Crisis
The Great Recession refers to the economic downturn from
2007 to 2009 after the bursting of the U.S. housing bubble and
the global financial crisis.
The Great Recession was the most severe economic
recession in the United States since the Great Depression of
the 1930s.
In response to the Great Recession, unprecedented fiscal,
monetary, and regulatory policy was unleashed by federal
authorities, which some, but not all, credit with the subsequent
recovery.
 Timeline
Pre-Crisis:
2001- 9/11 attack happens causing US Federal Reserve to cut interest rates
2002-2006: Housing market boom fueled by easy credit, risky loans (subprime mortgages), and rising
prices.
2006: Early warning signs emerge with rising delinquencies and falling housing prices.
August 2007: Fed injects $24 billion into banking system due to subprime crisis concerns.
Crisis Timeline:
September 2007: Bear Stearns receives emergency loan, marking a turning point.
February 2008: Auction-rate market freezes, signaling liquidity issues.
March 2008: Bear Stearns collapses and is acquired by JPMorgan Chase.
September 2008: Lehman Brothers files for bankruptcy, triggering widespread panic.
September 2008: AIG saved by $85 billion government bailout to prevent financial meltdown.
October 2008: Congress approves $700 billion Troubled Asset Relief Program (TARP) to rescue
banks.
November 2008: Barack Obama elected President, raising hopes for economic recovery.
 Timeline
Recession and Recovery:
December 2007 - June 2009: Official recession in the US, marked by declining GDP, rising
unemployment, and business failures.
2009-2010: The stock market recovers, unemployment peaks at 10%, and economy slowly stabilizes.
2011-2020s: Long and uneven recovery, with lasting impacts on housing, jobs, and social safety nets.
The Great Recession: The crisis plunged the US into a severe recession from December 2007 to June
2009. GDP plummeted, unemployment soared to 10%, and millions lost their jobs.
Housing Market Crash: Home values across the country nosedived, with some areas experiencing
declines of over 50%. This wiped out trillions of dollars in wealth and left many underwater on their
mortgages.
Financial Meltdown: Major financial institutions like Lehman Brothers collapsed, and others required
massive government bailouts to stay afloat, shaking confidence in the entire financial system.
Foreclosures and Displacement: Millions of Americans faced foreclosure, losing their homes and
communities. This disproportionately affected minority communities and contributed to a rise in
homelessness.
Key Statistics of the Great
Recession of 2008
Housing Market Crash:
Median Home Price Decline: From a peak of $319,000 in July 2006, the
median home price in the US plummeted to $179,900 by March 2012,
marking a 52% decline.
Foreclosure Rates: At the peak of the crisis in 2010, the national
foreclosure rate reached 14.8%, meaning nearly 1 in 7 homes faced
foreclosure.
Vacancy Rates: The rental vacancy rate soared to 11.4% in 2010, a
significant increase from 4.9% in 2005, indicating a glut of unsold homes.
Economic Devastation:
Gross Domestic Product (GDP) Decline: The US economy shrank by 8.5%
in 2008, marking the steepest annual decline since World War II.
Unemployment Rate: Job losses were rampant, with the unemployment rate
peaking at 10% in October 2009.
Key Statistics of the Great
Recession of 2008
Government Intervention:
Troubled Asset Relief Program (TARP): The US government enacted TARP,
a $700 billion bailout package, to rescue struggling financial institutions
and prevent wider economic collapse.
Federal Reserve Intervention: The Federal Reserve slashed interest rates to
near zero and implemented quantitative easing, purchasing trillions of dollars
in assets to stimulate the economy.
 Famous monetary and fiscal policies in US history
Monetary Policies
Federal Reserve Act establishment of the Federal Reserve
System (1913)
The Federal Reserve Act gave the United States a more stable
banking and monetary system.
The Gold Reserve Act of 1934
devalued the dollar in relation to gold and permitted the
government to hold gold reserves in an effort to boost inflation
during the Great Depression.
Quantitative Easing (2008-2014)
The Federal Reserve implemented multiple rounds of quantitative
easing (QE) in response to the 2008 financial crisis, purchasing
financial assets to inject liquidity into the economy.
Fiscal Policies
New Deal (1930s)
1930s saw the implementation of President Franklin D. Roosevelt's New Deal
programs, which included social welfare programs, financial reforms, and
infrastructure improvements intended to counteract the effects of the Great
Depression.
The Economic Recovery Tax Act (1981)
The Reaganomics policy of minimizing government involvement in the economy
included the 1981 Economic Recovery Tax Act, which lowered individual income
tax rates and expedited corporate depreciation.
Act of 2009 for American Recovery and Reinvestment: During the
Great Recession, this act was passed under President Barack Obama with the
intention of boosting the economy by providing funding for projects related to
renewable energy, infrastructure, healthcare, and education.t
 U.S. Price Level and Gold Reserves in the
Consumer Price Inflation
Pre-Fed Era

We date World War I from July 1914 to November 1918, the Great The data are monthly
Depression from August 1929 to June 1938, and World War II from
September 1939 to September 1945
 Diving Deeper - Key Trends and
Insights
Long-term Decline 📉 Future Outlook 🔍
Briefly touch on current trends and
Despite fluctuations, the overall trend shows a
potential factors influencing future
gradual decrease in unemployment rate
unemployment rates, e.g.,
throughout the 50 years, suggesting economic
technological advancements, aging
progress and job creation
population, and policy changes.

Recessionary Impacts 📊 Structural Shifts 🔄

Shaded areas on the graph representing
recessions clearly show their significant
impact on unemployment, emphasizing
economic vulnerability
Consider highlighting specific sectors or
demographics that experienced significant changes
in unemployment patterns, e.g., automation in
manufacturing, rise of service jobs, and gender
differences.
 Breaking Down the Numbers - Where Does the Money Go?

Composition of Spending Trends and Shifts 📈📉 Impact and Challenges 💡

📊
Visual representation of the Highlight significant Discuss the economic and social
major categories of changes in spending implications of rising government spending,
government spending, patterns over time, including debt accumulation, inflation, and
including Social Security, including increasing resource allocations. Pose the question "Is
Medicare, Defense, shares of Social Security the current spending trajectory
Education, and Interest on and healthcare, and the sustainable?"
Debt. rise and fall of defense
spending during various
conflicts
 summary
Important policies in the fiscal and monetary domains have evolved throughout American economic
history. The Gold Reserve Act of 1934 sought to increase gold reserves in order to increase inflation,
whereas the Federal Reserve's establishment in 1913 maintained financial stability. After 2008, more
quantitative easing pumped billions of dollars. Key interventions included fiscal programs like
Reagan's 1981 tax cuts, Obama's $831 billion for infrastructure, healthcare, and education, and the
New Deal's $45 billion investment in welfare and infrastructure. These measures were calculated
reactions to economic difficulties that had a long-lasting effect on the country's financial system.
THANK YOU!