Lconomy of Lhe unlLed SLaLes

W Worlds largesL naLlonal economy lLs nomlnal Cu was esLlmaLed

Lo be nearly $147 Lrllllon ln 2010
1
approxlmaLely a quarLer
of nomlnal global Cu
W LargesL Cu aL purchaslng power parlLy approxlmaLely a flfLh
of global Cu aL purchaslng power parlLy
W 1he uS economy also malnLalns a very hlgh level of ouLpuL per
caplLa
W ln 2009 lL was esLlmaLed Lo have a per caplLa Cu () of $46381
Lhe 6Lh hlghesL ln Lhe world
W 1he uS ls Lhe largesL Lradlng naLlon ln Lhe world lLs Lhree largesL
Lradlng parLners as of 2010 are Canada Chlna and Mexlco
W Low unemploymenL raLe
W hlgh levels of research andcaplLal lnvesLmenL funded by boLh
naLlonal and because of decreaslng savlng raLes lncreaslngly by
forelgn lnvesLors
W Lhe worlds largesL manufacLurer represenLlng
19 of Lhe worlds manufacLurlng ouLpuL
W ln 2009 consumer spendlng coupled wlLh
governmenL healLh care spendlng consLlLuLed 70
of Lhe Amerlcan economy
W AbouL 30 of Lhe enLlre world's mllllonalre
populaLlon reslde ln Lhe unlLed SLaLes (ln 2009)
W 1he uS ls also home Lo Lhe worlds largesL sLock exchange
Lhe new ?ork SLock Lxchange
W lL also boasLs Lhe worlds largesL gold reserves and Lhe
worlds largesL gold deposlLory Lhe new ?ork lederal
8eserve 8ank
W 1he unlLed SLaLes ls also home Lo 139 of Lhe worlds 300
largesL companles whlch ls almosL Lwlce LhaL of any oLher
counLry
W A large conLrlbuLor Lo Lhe counLrys success has also been a
very sLrong and sLable currency 1he uS dollar holds abouL
60 of world reserves as compared Lo lLs Lop compeLlLor
Lhe euro whlch conLrols abouL 24
W Slnce Lhe 1960s Lhe unlLed SLaLes economy absorbed savlngs from Lhe
resL of Lhe world 1he phenomenon ls sub[ecL Lo dlscusslon among
economlsLs
W 1he uS ls by far Lhe mosL heavlly lnvesLedlnLo counLry ln Lhe world
wlLh forelgn lnvesLmenLs made ln Lhe uS measurlng almosL $24 Lrllllon
whlch ls more Lhan Lwlce LhaL of any oLher counLry
24
W 1he uS ls also by far Lhe largesL lnvesLor ln Lhe world wlLh uS lnvesLmenLs
ln forelgn counLrles LoLallng over $33 Lrllllon whlch ls almosL Lwlce LhaL of
any oLher counLry
23
W Llke oLher developed counLrles Lhe unlLed SLaLes faces reLlrlng baby
boomers who have already begun wlLhdrawlng money from Soclal
SecurlLy however Lhe Amerlcan populaLlon ls young and growlng when
compared Lo Lurope or !apan
W 1he unlLed SLaLes publlc debL ls ln excess of $14 Lrllllon and conLlnues Lo
grow aL a raLe of abouL $348 bllllon each day by dlrecL calculaLlon
beLween uecember 31 2010 and !uly 31 2011
W 1oLal publlc and prlvaLe debLwas $302 Lrllllon aL
Lhe end of Lhe flrsL quarLer of 2010 or 33 Llmes
Cu
W uomesLlc flnanclal asseLs LoLaled $131 Lrllllon and
domesLlc flnanclal llablllLles LoLaled $106 Lrllllon
W uue ln parL Lo Lhe amounL of boLh publlc and
prlvaLe lnvesLmenL Lhe economy of Lhe unlLed
SLaLes ls regarded as a Lype of mlxed economy
W 1he Amerlcan labor markeL has
aLLracLed lmmlgranLs from all over Lhe world and
ln 2009 ranked 16Lh ln Lerms of neL mlgraLlon
raLe
W 1he unlLed SLaLes ls ranked fourLh down from
flrsL ln 20082009 due Lo Lhe economlc crlsls ln
Lhe Clobal CompeLlLlveness 8eporL
30
W 1he counLry ls one of Lhe worlds largesL and
mosL lnfluenLlal flnanclal markeLs home Lo ma[or
sLock and commodlLles exchanges llke nASuAC
n?SL AMLx CML and PLx
W GD$14772 Lrllllon (2011)
1
(1sL nomlnal and )
W GD growth28 (2010)
1
W GD per cap|ta$47273 (2010)
2
(17Lh nomlnal 6Lh )
W GD by sector agrlculLure (12) lndusLry (219) servlces (769) (2009 esL)
W at|o (Cl)21 (lebruary 2011)
3
W opuat|o
beow poverty |e143 (2009)
4
W

G|| |ex43 (LlsL of counLrles)

W abor orce 1343 mllllon (lncludes unemployed) (2009 esL)
W abor orce
by occupat|o farmlng foresLry and flshlng 07 manufacLurlng exLracLlon
LransporLaLlon and crafLs 203 managerlal professlonal and Lechnlcal 373 sales and
offlce 242 oLher servlces 176
W flgures exclude Lhe unemployed (2009)
W Dempoymet92 (!une 2011)
W ,a| |ustr|es peLroleum sLeel moLor
vehlcles aerospaceLelecommunlcaLlons chemlcals creaLlve lndusLrles elecLronlcs food
processlng consumer goods lumber mlnlng defense blomedlcal research and healLh care
servlces compuLers and roboLlcs
W ase o Do|g 8us|ess ka 3Lh
3
SC where ls Lhe problem?
W lor Lhe flrsL Llme ln 70 years Lhe uS's credlL
raLlng has gone below 'AAA' Lhe hlghesL
grade whlch lndlcaLes a sLrong capaclLy Lo
repay loan lncludlng lnLeresL 1he downgrade
ls a huge seLback for Lhe world's blggesL
economy's credlblllLy
who downqroded who?
W
SLandard oor's one of Lhe Lhree ma[or
credlL raLlng agencles LhaL asslgns scores Lo
debL lssued by lnsLlLuLlons munlclpallLles and
governmenLs sald Lhere ls a helghLened
degree of rlsk ln holdlng debL lssued by Lhe
unlLed SLaLes So lL lowered lLs raLlng from
'AAA' Lhe hlghesL posslble level by one noLch
Lo AA+
why did 5P /ower the rotinq?
W 1he credlL raLlng agency belleved Lhe ouLsLandlng
debL of $143 Lrllllon and pro[ecLed deflclLs for
comlng years ln Lhe uS no longer warranL Lhe Lop
Ller raLlng asslgned Lo lL 1he agency felL Lhe
pollLlcal envlronmenL doesn'L bulld confldence
LhaL Lhe uS can agree on how Lo lower Lhe deflclL
ln a meanlngful way any Llme soon
W
why downqrode now?
W S gave Lwo reasons for downgradlng uS
debL 1he naLlon's flscal paLh and lLs broken
pollLlcal sysLem 1o avold a downgrade S
sald Lhe uS needed Lo noL only ralse Lhe debL
celllng buL also develop a credlble" plan Lo
Lackle Lhe naLlon's longLerm debL 1he agency
had lndlcaLed lL preferred a deal whlch would
reduce deflclL by $4 Lrllllon over 10 years
lnsLead lawmakers seLLled for a measure
whlch wlll cuL only $23 Lrllllon
oes this meon u5 debt isnt sofe?
W no 1he uS ls sLlll consldered Lo have a 'sLrong'
ablllLy Lo meeL lLs obllgaLlons
ow wi// downqrode impoct u5 debt?
W A lower raLlng wlll cause lnvesLors who buy uS
governmenL debL Lo demand a hlgher lnLeresL
raLe Lo hold LhaL debL Lo reward Lhem for Lhe
rlsk
whot shou/d u5 do now?
W 1he counLry musL prove lL can meeL lLs
flnanclal obllgaLlons noL [usL by borrowlng
more money buL by malnLalnlng a healLhy
balance of credlL Lo debL
whot it meons to the u5
W Amerlcans could face hlgher lnLeresL raLes on
morLgages car loans credlL cards and oLher
consumer loans 8uslnesses mlghL have Lo pay
more Lo borrow money Plgher Laxes 1he
lnLeresL on 1reasurys wlll go up Lo reflecL Lhelr
hlgher rlsk whlch means Lhe cosL of Lhe
naLlon's debL wlll go up accordlngly Plgher
lnflaLlon 1hey'll need Lo sLash away even
more money for reLlremenL
whot it meons to wor/d economy
W WlLh downgrade Lhe uS wlll geL less fund flow so
organlsaLlons wlll flnd lL dlfflculL Lo ralse money whlch
wlll lmpacL Lhelr capaclLy Lo lmplemenL l1 soluLlons
1hey wlll cuL down on l1 spendlng Lhus hurLlng l1
vendors across Lhe world lndla and Chlna have Loo
much domesLlc consumpLlon so even lf Lhese
counLrles' exporLs are hlL Lhey wlll make lL ouL on
domesLlc consumpLlon lnvesLors across Lhe world wlll
swlLch Lo safe havens llke gold and oLher meLals so
prlces of Lhese commodlLles wlll soar
W
wi// it hit lndion l1e5 8POs?
W
1he downgrade could have an adverse lmpacL
on Lhe l1 enabled servlces and buslness
process ouLsourclng lndusLrles wlLh Lhe laLLer
posslbly havlng Lo wlLhhold expanslon plans or
delay forelgn dlrecL lnvesLmenL plans lL wlll
also lmpacL Lhe hlrlng plans of Lhese secLors as
cusLomers ln Lhe uS are llkely Lo puL Lhelr
expanslon plans on hold
W 5P hos downqroded my 1reosurys 5hou/d l
be se//inq?
no 1he downgrade means S belleves Lhe
uS's ablllLy Lo make good on lLs debL ls now
very sLrong" raLher Lhan exLremely sLrong"
ln shorL Lerm Lhe
1reasurys are qulLe safe
W
W wi// the downqrode couse the vo/ue of the 1reosury
ho/dinqs to drop?
ln Lhe shorL Lerm probably noL
wou/dnt the money be sofer e/sewhere?
noL necessarlly Movlng your cash lnLo forelgn debL also
means ownlng forelgn currencles ln Cermany's case LhaL
means ownlng euros noL exacLly a safe haven now
W
who owns u5 debt?
CLher Lhan Lhe uS lederal 8eserve Chlna wlLh $116
Lrllllon ln uS 1reasury securlLles ls Lhe blggesL holder
W wi// investors prefer debt from hiqher roted countries?
Llkely 8uL Lhe uS markeL reLalns slgnlflcanL appeal because lLs bond markeL
was more Lhan $33 Lrllllon aL Lhe end of March 2011 no oLher bond markeL
ls close Lo LhaL slze
W
ls u5 sofe from other downqrodes?
no 1o begln wlLh S has asslgned a 'negaLlve' ouLlook Lo Lhe uS long
Lerm credlL raLlng Whlch means anoLher downgrade ls posslble ln Lhe nexL
12 Lo 18 monLhs lf lL does noL see an lmprovemenL ln debL reducLlon CLher
raLlng agencles Moody's and llLch sLlll have an 'AAA' raLlng on Lhe uS debL
8uL boLh of Lhose agencles have suggesLed Lhe uS could also be
downgraded lf pro[ecLed governmenL deflclLs are noL relned ln
W
ow /onq hos the u5 hod on 444 rotinq?
S has malnLalned an 'AAA' raLlng on Lhe uS slnce 1941 Moody's has had
an 'Aaa' raLlng on Lhe uS slnce 1917 llLch's LopLler AAA raLlng daLes back
Lo 1994
W
W ountries thot hove foced downqrode ond
bounced bock
Canada AusLralla and Sweden have suffered
slmllar downgrades and recovered Lo reclalm
Lhe coveLed LrlpleA raLlng 1he counLrles [oln
AusLrla uenmark llnland lrance Cermany
Lhe neLherlands norway Slngapore
SwlLzerland and Lhe
uk as Lhe world's ma[or LrlpleA naLlons
W at|o
W 1he peLrol sLaLlon ls as rellable a place as any Lo Lake Amerlcas
economlc pulse 1he sharp rlse ln gasollne prlces ln Lhe flrsL few
monLhs of Lhe year knocked Lhe confldence of consumers who sLlll
accounL for abouL 70pc of Lhe counLrys gross domesLlc producL
W 1haL squeeze has been all Lhe more palnful because Lhe ma[orlLy of
Amerlcans have noL en[oyed pay rlses slnce Lhe crlsls lndeed
lnflaLlonad[usLed average hourly earnlngs fell 16pc ln Lhe pasL 12
monLhs Llke Slr Mervyn klng aL Lhe 8ank of Lngland led chlef 8en
8ernanke lnslsLs LhaL lnflaLlon wlll prove shorLllved
W 1he good news for Lhe bulls ls LhaL gasollne prlces have dropped by
almosL 10pc slnce reachlng a Lhreeyear hlgh aL Lhe sLarL of May
Whlle Lhe news ls lmprovlng Lhe led and 1he WhlLe Pouse know
Lhelr conLrol over such a key varlable ls very llmlLed