Economy of the United States

The United States operates a highly developed, diversified market economy. It holds the top position globally by nominal GDP, accounting for 26% of worldwide economic output, and ranks second when measured by purchasing power parity (PPP). Per person, the U.S. stands ninth in nominal GDP per capita and tenth in GDP per capita by PPP. The U.S. dollar functions as the world’s primary reserve currency, is used widely internationally, and serves as the benchmark for the petrodollar and eurodollar. Since World War II, the economy has experienced relatively stable growth, low unemployment and inflation, and rapid technological progress. This performance is driven by high productivity, technology, a well-developed transportation network, and abundant natural resources. The U.S. is the second-largest manufacturer globally, with its manufacturing sector contributing one-fifth of the world’s total. Its top trading partners are Mexico, Canada, China, Japan, and Germany. The country is the world’s largest importer and second-largest exporter, maintaining free trade agreements with numerous nations. It leads the world in producing petroleum, natural gas, and blood products. The U.S. also has the largest consumer market. As of 2026, its commercial banks hold $25 trillion in assets. The nation operates a large U.S. treasuries market and possesses the world’s largest gold reserves. It is home to 139 of the 500 largest global companies. Among OECD member states, Americans rank sixth in average household and employee income. In 2026, they had the highest median household income in the OECD, though the country also has one of the highest income inequality levels among developed nations. The U.S. has the most billionaires in the world, with a combined wealth of $5.7 trillion. Its labor market is highly flexible, with relatively low job security, and it attracts immigrants from across the globe, resulting in one of the highest net migration rates. The social security system is highly efficient, with social expenditure at roughly 30% of GDP. The New York Stock Exchange and Nasdaq are the largest stock exchanges worldwide by market capitalization and transaction volume. U.S. capital markets are enormous, with combined global equity and bond activity exceeding $134.7 trillion. The country ranks high in global venture capital and research and development funding. Since 2023, it has spent about 3.46% of GDP on cutting-edge R&D across various sectors. Since the 1990s, consumer spending has made up over 60% to 70% of the economy. The U.S. is among the top performers in studies on ease of doing business and global competitiveness. **History**

**Colonial era and 18th century** The U.S. economic history began with British settlements along the Eastern seaboard in the 17th and 18th centuries. After 1700, the population grew rapidly, and both imports and exports expanded accordingly. Trade involved Africa, Asia, and most often Europe. The 13 colonies gained independence from the British Empire in the late 18th century and quickly shifted from colonial economies toward an agriculture-focused one. **19th century** Over 180 years, the U.S. developed into a large, integrated, industrialized economy that accounted for about one-fifth of the world economy. During this period, U.S. GDP per capita surpassed that of many other nations, overtaking the British Empire at the top. High wages attracted millions of immigrants from around the world. In the 1820s and 1830s, mass production moved much of the economy from artisans to factories, and new government regulations strengthened patents. Early in the century, over 80% of Americans worked in farming. Manufacturing mainly involved initial processing of raw materials, led by lumber and sawmills, textiles, and boots and shoes. Abundant natural resources fueled rapid economic expansion in the 19th century. Ample land allowed the farming population to keep growing, but manufacturing, services, transportation, and other sectors grew much faster, so that by 1860 only about 50% of the population lived in rural areas, down from over 80%. Recessions in the 19th century often coincided with financial crises. The Panic of 1837 triggered a five-year depression with bank failures and unprecedented unemployment. Because of major economic changes over centuries, comparing the severity of modern recessions to early ones is difficult. Recessions after World War II appear less severe than earlier ones, though the reasons remain unclear. **20th century** At the start of the century, new innovations and improvements to existing ones raised the standard of living for American consumers. Many firms grew large by exploiting economies of scale and better communication to operate nationwide. Concentration in these industries raised fears of monopolies that would raise prices and lower output, but many firms cut costs so quickly that trends moved toward lower prices and more output. Many workers shared in the success of these large firms, which typically offered the highest wages in the world. The U.S. has been the world’s largest national economy since around 1890, overtaking the United Kingdom in GDP in 1872 and in GDP per capita (adjusted for PPP) in 1905.