Economy of the United States: an energy exporter that buys more than it sells

What American households spend

The American economy runs on its own consumers. Personal consumption accounts for about 70% of GDP, business investment for about 18% and government purchases at every level for about 17%, while net exports subtract about 3% because the country imports more than it sells abroad. The World Bank put GDP at $30.77 trillion in current dollars in 2025, three times the $10.25 trillion of 2000, and GDP per person at $90,027.

The Bureau of Economic Analysis measured real growth of 2.1% in 2025, driven mainly by consumer spending and investment, with private service industries growing 2.7% and goods-producing industries 1.2%. The year slowed at the end: output grew at an annual rate of 0.5% in the fourth quarter, with government value added falling 7.8% in a quarter that included the federal shutdown of October and November 2025. Growth picked up to an annualised 2.1% in the first quarter of 2026 and 1.5% in the second. Personal income rose 4.9% in 2025, and every state and the District of Columbia recorded real growth, from 0.3% in North Dakota to 3.1% in South Carolina and Florida.

How a farming republic became an industrial one

Early in the nineteenth century more than 80% of Americans worked on farms, and manufacturing meant the first stages of working raw materials: sawmills, textiles, boots and shoes. Mass production moved much of that work from artisans into factories in the 1820s and 1830s, and industry and services then grew so much faster than farming that by 1860 only about half the population was rural. Recessions in the nineteenth century usually came with financial panics; the Panic of 1837 was followed by five years of depression and bank failures. The country's size did much of the rest. By the measure of purchasing power, American GDP passed Britain's in 1872 and GDP per person passed it in 1905. Neither world war was fought in the contiguous states, and at the peak of the Second World War nearly 40% of GDP went to war production, under rationing and controls on prices and wages, and large segments of the workforce were inducted into the military at half their former wages.

After 1945 policy leaned first on government spending and taxes, in the manner of John Maynard Keynes, to steady the economy. High inflation, interest rates and unemployment after 1973 undermined that approach. From the 1970s, manufacturers moved much production of goods to countries where it could be made cheaply enough to cover the cost of shipping, and real income growth slowed: real GDP per person grew 3.0% a year on average in the 1960s and 0.7% a year in the 2000s.

Manufacturing is smaller as a share of the economy than it was, but American factories still produce about a fifth of global manufacturing output. The country produces petroleum, natural gas and blood products in quantity, and agriculture, forestry and fishing accounted for 0.9% of GDP in 2021. It spent about 3.46% of GDP on research and development from 2023, and its capital markets, equity and bond activity together, exceed $134.7 trillion. Business is mostly small. More than 99% of private employers are small businesses, and the 30 million of them account for 64% of newly created jobs. A few large employers are very large: Walmart employs 2.1 million people worldwide and 1.4 million in the United States.

How the states' economies differ

The fifty states are economies of their own, and the quarterly figures show how far apart they can move. In the fourth quarter of 2025 real GDP grew in 35 states, at annual rates from 3.8% in North Dakota down to a fall of 8.3% in the District of Columbia; output in Indiana and Maine did not change. Over the whole of 2025, personal income rose in every state, from 6.9% in Hawaii to 3.2% in the District of Columbia. Single events can move a state's figures. Hawaii's personal income jumped in the fourth quarter of 2025 because an electric utility paid a settlement to households for the Maui wildfire of August 2023, which burned through the town of Lahaina; the same settlement, recorded at an annual rate of $7.5 billion, reduced national corporate profits for the quarter. Profits from current production still rose by $275.7 billion over 2025, against $184.4 billion in 2024.

Consumer spending has made up 60 to 70% of the economy since the 1990s, and household borrowing tracks it. The ratio of household debt to GDP rose from 70% in early 2001 to 99% in early 2008, and in 2009 to 2012 households paid down debt for the only years since 1947.

How energy output overtook consumption

For most of the late twentieth century the United States used more energy than it produced, especially between 1990 and 2010. The Energy Information Administration records that production has exceeded consumption every year since 2019. The reversal came from new drilling and production techniques in shale and tight rock: crude oil production fell from 1970 to 2008, turned upward in 2009, and reached a record in 2025, and dry natural gas production has exceeded consumption since 2017.

The mix has shifted within fossil fuels. Coal has lost most of its place as the electric power sector turned to other sources, and renewable production reached a record in 2025, driven mostly by solar and wind. Commercial nuclear power began in 1957, grew until 1990 and then levelled off; ten nuclear plants closed between 2013 and 2021, unable to compete with gas-fired and renewable generation.

Why the country buys more than it sells

The United States imports more than it exports, and the World Bank put its current account deficit at 3.6% of GDP in 2025. Exports of goods and services came to 11.0% of GDP in 2024 and imports to 14.0%. The Census Bureau and the Bureau of Economic Analysis reported a combined goods and services deficit of $88.6 billion in July 2026, with $310.7 billion of exports against $399.3 billion of imports.

The pattern moved in 2026. For the first seven months of the year the deficit was $188.4 billion, or 29.6%, smaller than in the same months of 2025, as exports grew 12.0% and imports only 1.9%. Services are the other side of the account: the United States sells more services abroad than it buys, a surplus of $31.0 billion in July 2026.

The dollar gives the country an unusual position in all this. It is the leading reserve currency in international use and the reference standard for the petrodollar and eurodollar markets, and the market for US Treasury debt is large.

Where Americans work

Services produced 76.3% of GDP in 2021 by the World Bank's count, and manufacturing 10.5%, down from 15.1% in 2000. The shift is old: in 1955, 55% of American workers were in services and 10 to 15% in agriculture; by 1980 more than 65% were in services and less than 5% on farms. The private sector employs 85% of workers and government 14%, and the country's roughly 30 million small businesses employ about 37% of the workforce.

The labour market is flexible and lightly protected. The United States is the only advanced economy that does not guarantee workers paid vacation or paid sick days by law, and about 12% of workers belong to a union, most of them in government. The Bureau of Labor Statistics reported 162,000 new payroll jobs in August 2026 and an unemployment rate of 4.1%. Average hourly earnings in private employment were $37.75, 3.1% higher than a year earlier.

Unemployment has swung widely. It reached 9.9% in April 2010 after the financial crisis and 14.7% in April 2020 in the pandemic, then fell to 3.7% in May 2023. By November 2025 it had risen to 4.6%.

How the economy came through its recessions

The Great Recession began with the collapse of a housing bubble. Household debt rose from 70% of GDP in the first quarter of 2001 to 99% in the first quarter of 2008, and when house prices began falling in 2006 the value of mortgage-backed securities collapsed. GDP fell 5.0% from spring 2008 to spring 2009. Real GDP regained its pre-crisis peak by 2011, but payroll jobs took until May 2014.

The pandemic recession was sharper and shorter. Output fell at an annualised rate of 32.9% in the second quarter of 2020, and the World Bank records a 2.6% fall for 2009 and a 6.2% rise for 2021, the highest growth in its series since 2000. Consumer prices then rose fast: the consumer price index in June 2022 stood 9.1% above a year earlier, the highest rate in 41 years. Inflation fell back to 2.9% by September 2025, against the Federal Reserve's target of 2%, and the personal consumption price index rose 2.6% over 2025 as a whole.

What the federal debt looks like

Borrowing has risen through the century. Federal debt held by the public was 31% of GDP in 2000, 52% in 2009 and 77% in 2017, and passed 120% in 2024. The International Monetary Fund, which counts all levels of government, put general government gross debt at 123.9% of GDP in 2025, after a high of 132.6% in 2020, and a deficit of 6.8% of GDP that year.

The World Bank measured tax revenue at 10.8% of GDP in 2024, down from 13.0% in 2000. Health spending, public and private together, came to 16.7% of GDP in 2023.

How income and wealth are shared

Income is unequally distributed. The World Bank put the Gini coefficient at 41.8 in 2024, against 40.1 in 2000. Commentators have described the post-pandemic economy as K-shaped: high earners gained from the stock market and rising property values, while lower earners found it harder to make ends meet. The pandemic also pushed up the cost of housing.

Some gaps have narrowed. A report from the Federal Reserve Bank of Cleveland on 13 July 2026 found that the earnings gap between Black and Hispanic men and White men narrowed after the pandemic recession to its smallest in 25 years in 2022. Minority-owned businesses, 4.1 million of them, employ almost five million people.