1	The US Economy A brief analysis of the world’s largest economy by John Birchall Bishops Stortford College
2	A brief economic history For 100 years after Columbus traders journeyed to New World Pilgrims arrived in Massachusetts and more business minded people made their home in Virginia Charter companies began to exploit the resources of East US Settlers developed own interests and structures Industry began with farming, some plantations and exports of rice, tobacco and dyes
3	Brief history - 2 Supportive industries then appeared e.g saw mills, ship building,iron forges. Plantations, using slave labour started Living standards began to be better than in UK By 1770 self-government wanted War of Independence won and New Nation emerged in 1787 Adopts new constitution. New nation from Maine to Georgia - a common market
4	Brief history - 3 Federal government provided the legal framework and States developed within this Intellectual property recognised tariffs imposed to protect infant industries First National Bank started in 1791 With invention of cotton gin the trade boomed Moved economy south and westwards National roads and waterways created at start of nineteenth century
5	Brief history - 4 Steam boats start to run over larger distances railroads arrive foreign capital attracted and industrialisation begins By 1860 16% of population living in cities one third of national wealth created by manufacturing Immigrants start to arrive in large numbers
6	Brief history - 5 South remained more rural Northern victory in civil war determined future direction of economy end of slave labour planter power diminishes Industrialists begin to control economy discoveries, such as oil drive new nation on typewriter invented, telephone, phonograph, electric light bulb, refrigeration on railroads
7	Brief history - 6 Industrial infrastructure develops e.g coal, iron mines, copper, silver lead and cement factories emerge mass production starts scientific management Rich business men became national heroes fierce competition and some questionable tactics government begins to react to business
8	Brief history - 7 Gospel of work and thrift philanthropic gifts to universities etc risk and excitement deliver increases in living standards corporations emerge New management elite start to appear the Gilded Age moves into twentieth century largest economy in world little foreign involvement
9	The role of government In early years Federal government only in transport laissez-faire economy begins to change in latter part of nineteenth century farmers start to ask for help Fear of corruption in government starts new political movements Railroad Act in 1887 and government begins to create Federal Agencies e.g Food and Drug Administration
10	The role of government - 2 The New Deal of 1930’s deepens government involvement Federal authority extended into banking, agriculture and public welfare minimum wage established Securities and Exchange Commission started Social Security system introduced More central control introduced throughout 1930’s and during war
11	The post war economy - 1 Consumer boom followed peace Not depression some feared when war spending ended GNP up from $200000m in 1940 to $300000m in 1950 to $500000m in 1960 Military spending continued as Iron Curtain emerged Marshall Plan Employment Act 1946 ‘ promote maximum employment, production and purchasing power.’
12	Post war economy - 2 Consolidation in business - communications, hotels, insurance, car rentals by 1956 majority of workers in white-collar jobs unions win good terms of employment Agriculture faces tougher times By 1998 just 3.4 m in agriculture had been 7.9m at end of war suburban migration grows air conditioning becomes popular
13	Post war economy - 3 ‘Sun belts’ e.g Houston grow in popularity shopping malls begin to flourish industry begins to move ‘out of town’ New, powerful states emerge in place such as Florida, Georgia, Arizona and Texas
14	Post war economy - 4 1960/70’s times of considerable change new nations, insurgent groups, challenges to US supremacy Kennedy era - New Frontier. Space, Peace Corps, help for elderly Post Kennedy Johnson wanted a Great Society Medicare, Food Stamps, increased military expenditure/Vietnam But government revenues do not rise
15	Post war economy - 5 Rising inflation, OPEC problems, rises in unemployment, Federal deficits up, foreign competition increases, stock market sags Fear that nation is losing control. Nixon goes Imports up, trade deficit grows. Stagflation becomes the new problem expectations push up prices, higher wages follow, labour contracts have ‘cost of living’ clauses
16	Post war economy - 6 Government spending rises to protect vulnerable economy sees prices rise and unemployment Carter tries to break spiral De-regulation starts e.g airlines Federal Reserve Board clamps down on inflationary trends control of money supply interest rates rise, recession follows
17	Post war economy - 7 Recession deepened into 1982 Cycle broken by early 1983-prices fall, growth returns Reagan bases polices on supply-side doctrine Lower taxes, more savings, more investment, more output, overall economic growth Federal government too big - Reagan Increase military spending
18	Post war economy - 8 Federal budget swells to -$221000m in 1986. But not all winning - farmers lose, especially in drought areas, banking crisis, some fear it will all end in pain External push in policy - communism falls Asia - beginning to hurt US supremacy ‘Corporate raiders’ strike in US, as stock prices are low
19	Post war economy - 9 !990’s see Clinton elected declares end of big government and fails with Medicare reforms opens -up markets e.g local telephone services Reduces welfare benefits Fall of USSR and satellite states open up new business Dow Jones end decade on 11000, had been 1000 in 1979
20	Post war economy - 10 Framing continues to decline service sector expands deficit peaks in 92 and falls New Economy? Low inflation, high employment, high growth? US grows in its interdependence with global economy NAFTA formed. Look to EU as base for sourcing markets Decade ends with new feeling of confidence
21	Conclusion Economy grew from February 91 till end of decade - longest in peacetime unemployment just 4.1% of workforce - lowest for 30 years inflation low Growth high global presence expanding Asian markets suffer downturn US in good shape and confident Major locomotive economy in world