Introduction
The study of aggregate economic structures, as well as the functioning and behavior of economies, is known as macroeconomics. Price levels, gross domestic product (GDP), unemployment, inflation, national income, and economic growth are all under the umbrella term macroeconomics. The economy of the United States of America (US) is a robust example of a mixed type of economy (Arnold et al., 2022). A mixed economy is one in which the market is controlled by the supply and demand dynamics and the government’s intervention in the market. This research paper will analyze data obtained from various credible sources to compare and contrast the economy of the United States of America to that of other countries worldwide.
Literature Review
The OECD Economic Outlook indicated that the United States’ gross domestic product growth dropped to 1.9 percent in 2020, from 2.3 percent in 2019 (Rents, 2022). Although inflation increased from 1.6% in 2019 to 1.8% in 2020, the 2020 unemployment rate stayed below 4%. Comparatively, the rate of inflation in 2019 was 1.6 percent. The fixed investments of businesses were projected to decrease by a marginal amount, from 3.0 percent in 2019 to 2.5 percent in 2020. The long-term interest rate was also expected to decrease somewhat, going from 2.75 percent in 2019 to 2.85 percent in 2020, while the short-term interest rate was expected to edge down to 2.55 percent from 2.6 percent in 2019.
The value of the US dollar, when measured against other currencies, increased to 2.3 percent in 2020, up from 1.5 percent in 2019. According to a report published in The New York Times, the average price of a barrel of oil or natural gas in 2021 was $ 60, the same as in 2020. On the other hand, the costs are climbing and are projected to reach an average of $81.73 a barrel in 2025. The United States and China reportedly have a trade pact with a value of two hundred billion dollars, as reported by The New York Times (Cavallo et al., 2019). The United States and China have ceased hostilities in their trade war, but trade tariffs remain on various Chinese commodities, contributing to slow economic growth.
The Washington Post (2020) suggested that tax cuts and reforms enacted by President Trump have the opposite effect of what was intended since they have led to an increase in stock buybacks rather than an increase in the number of jobs created in the economy. The United States economy is expanding slowly and will not pick up much momentum anytime soon despite recent trade agreements, tax cuts, and historically low-interest rates (Post, 2020). According to the International Monetary Fund (IMF), the growth rate of the global economy has increased to 3.3 percent from 2.9 percent in the year 2021 (Reinsberg et al., 2022). The World Bank reports that the current economic growth rate has been the lowest in the last three years.
Economic Analysis
Comparison with the Canadian Economy
The OECD Economic Outlook showed that the economy of Canada continues to expand, reaching a GDP growth rate of 1.8 percent in 2021, which is an increase from the GDP growth rate of 1.7 percent in 2020 (Rents, 2022). The expansion is due to the rise in the amount of money spent by consumers and the active labor markets. The rise in GDP was essential in Canada’s successful evasion of the impending economic downturn in 2021. The inflation rate was estimated to range between 1.8 and 2.0 percent in 2021, which decreased from 2.2 percent in 2020. The interest rate had not changed from its previous 2.75 percent (Romer, 2018). The economy is expanding at a high pace in Quebec and British Columbia, and real business investment is rising at a rate of 1.5 percent in 2020, an increase from the rate of 1.0 percent in 2019.
In 2021, neither the United States nor Canada saw their GDP growth rates exceed 2%. In 2020, Canada and the United States will have interest rates lower than 2.75 percent. In 2020, Canada and the United States experienced less than 2% inflation rates. The economies of Canada and the United States are highly intertwined because they are each country’s major trading partners, as the World Bank reported. The United States and Canada are members of the World Trade Organization, the Organization for Economic Cooperation and Development (OECD), and NAFTA (WTO). The United States and Canada both have prosperous and thriving economies (Akerlof, 2020). The expanding service and manufacturing sectors are driving economic growth in Canada and the United States.
Compared to Canada, whose economy is weaker, the United States has a more developed technological and aerospace infrastructure. The Canadian dollar is used in the Canadian economy, while the US is used in the American economy (Romer, 2018). Canada has a nominal GDP of $21.439 trillion, compared to the United States, which is worth $1.731 trillion, placing it tenth overall, according to the International Monetary Fund (IMF). KPMG reports that the US and Canada have a corporation tax rate of 27%, with Canada’s rate being somewhat lower at 26%.
Comparison with China’s Economy
The South China Morning Post reports that China’s economy is slowing down and experiencing its slowest annual growth rate in 29 years. The OECD Economic Outlook predicts that China’s GDP will increase by 5.9 percent in 2019, down from 6.1 percent in 2020 to 6.6 percent in 2019 (Rents, 2022). China and the United States have nearly identical rates of GDP decline. In contrast, the range of possible growth rates is quite broad. Despite an existing trade agreement, the trade war between the United States and China is to blame for the economy’s recent downturn (Cavallo et al., 2019). The economies of the United States and China are the greatest on a global scale. Both nations’ economies are market-based, meaning that supply and demand and government regulation all have an impact. The United States has the world’s highest nominal GDP at $21.439 trillion, while China’s is the second highest at $14.14 trillion, as the International Monetary Fund (Cavallo et al., 2019). The economies of the United States and China rely heavily on natural resource exports. When PPP is considered, China ranks first, and the United States ranks second.
Comparison with Germany’s Economy
The World Bank ranks Germany as Europe’s largest economy. A technical recession did not negatively impact German economic growth in 2019. The German economy is expected to rise by about 1.1 percent this year, up from 0.6 percent the year before. The OECD Economic Outlook predicts that by 2020, the jobless rate would have risen to 5.3% from 4.9% in December of this year (Rents, 2022). The US-China trade war, Brexit’s political uncertainty, and the German auto industry’s switch to electric power all played a role in the country’s economic decline.
The US and Germany both have thriving economies, with the US’s nominal GDP at $ 21.439 trillion and Germany’s at $ 3.863 trillion, respectively. Both countries rely heavily on the service industry for jobs and labor. They are both OECD and WTO members. In contrast to Germany’s rate of over 4.0 percent, the unemployment rate in the United States is below that. The European Union is Germany’s most important trading partner, while Canada is the United States’ most important commercial partner (Bergsten, 2017). The Euro is the de facto currency of Germany, while the dollar is the de facto currency of the United States.
Comparison with the United Kingdom economy
The OECD Economic Outlook indicated that the UK’s economic growth declined to start in 2021. A 1.7% annual increase in GDP was expected in 2019, and a 1.5% increase in 2020. Unemployment rose to 4% in 2020, an increase from the current rate of 3.8% (Rents, 2022). While the overall inflation rate has risen from 1.9 percent in 2019 to 2.5 percent, the monthly inflation rate has decreased from 0.6 percent in 2019 to 0.4 percent today. The UK’s interest rates have risen from 0.5 percent to 0.75 percent, a considerable increase. At 78.2 percent of GDP, the UK government’s debt to GDP is down significantly from 81.3 percent in 2019, according to the IMF (Rents, 2022). The sterling pound is the primary currency of the United Kingdom, while the dollar is the primary currency in the United States.
The economies of the United States and the United Kingdom are in decline. The unemployment rate in the United States and the United Kingdom is below 4% (Rents, 2022). There is no doubt that the economies of both the United States and the United Kingdom are healthy. They are both OECD and WTO members. The UK’s nominal GDP is $ 2.744 trillion compared to the United States. The service sector is both countries’ primary employment and economic output source. Both countries’ GDP will expand by less than 2 percent in 2020.
Comparison with the France Economy
France’s economy has been continuously expanding. According to the OECD Economic Outlook, there was a modest uptick in GDP growth in 2020 to 1.3 percent from the previous year. There was a decrease in the unemployment rate to 6.8%, down from an average of 7.2% in 2019 (Rents, 2022). In 2020, inflation was expected to rise from 1.2 percent to 1.4 percent. The United States and France are both WTO members. Each country is well-off and well-developed. There is a strong correlation between the two countries’ GDP contributions to the services sector. Both countries’ GDP growth and inflation rates are currently under 2 percent. Both countries’ largest employers are in the service industry. France has an unemployment rate above 4.0 percent compared to the United States (Rents, 2022). The French and American economies are widely diversified throughout all sectors, although the French economy is more technologically advanced than the American.
Conclusion and Summary
To summarize, the rate of inflation, the rate of unemployment, the pace of increase in gross domestic product, the level of prices, and the country’s national income all play a role in the country’s economic expansion. When comparing the economies of different countries, using the gross domestic product (GDP) per person is useful. For instance, the nominal GDP of the US is $21.439 trillion, and that of Germany is $3.863 trillion, both of which are strong economies. Both nations heavily rely on the service sector for employment and labor. It does this by dividing the total economic production of a country by the total population of that country. Despite the rapid economic expansion seen in several other developing countries, the economy of the United States remains the strongest one worldwide.
References
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