The economy

of USA
2019-2023
 Global Economic
Influence: Global Perspective:

The US economy is the The US economy is closely

Why USA ?
world's largest, impacting linked to the global
global markets, trade, and economy, and studying it
financial systems. can provide a global
Understanding its perspective on economic
dynamics is crucial for issues, valuable for
navigating the careers in international
Understanding USA’s international landscape. business, trade, or policy.

Economy Diverse and Dynamic Multicultural

Economy: Environment:

The US economy is Studying in the US

characterized by
exposes international
innovation, a skilled
students to different
workforce, and a
cultures and perspectives,
competitive business
enhancing their global
environment, making it a
perspective.
hub for technological
advancements and
financial services.
CONTENT
01 GDP

02 BUSINESS CYCLES

03 UNEMPLOYMENT

04 INFLATION

05 INTERNATIONAL
ECONOMICS
06 MACROECONOMIC
POLICY
 [Link]
ANALYSIS OF LONG RUN ECONOMIC
GROWTH
 Gross Domestic Product
It is the monetary value of all finished goods and
services made within a country during a specific
period.

Method used by USA to calculate it's GDP:

USA calculates its GDP using the expenditure approach, which
sums up all spending on final goods and services within the
country, including consumer spending, investment,
government spending, and net exports.
Over the last five years, the US economy has
experienced a period of growth, with notable
fluctuations, including a sharp decline in 2020 due
to the COVID-19 pandemic, followed by a rapid
recovery and continued growth.
Here's a more detailed look:
2020: The US economy contracted by -2.16% in
2020 due to the COVID-19 pandemic.
2021: The economy rebounded significantly, with a
GDP growth rate of 6.06%.
2022: Growth slowed to 2.51%.
2023: GDP growth increased to 2.89%.
2024: The US economy expanded at a healthy
annual 2.77% pace in the final three months of
2024, supported by a year-end surge in consumer
spending.
 KEY
OBSERVATIONS
2020 Recession:
The U.S. economy experienced a significant
contraction in 2020 due to the COVID-19
pandemic, with a negative real GDP growth rate of
-2.16%.
Over the last five years (2019-2024), the U.S. Strong Rebound:
economy experienced both real and nominal GDP In 2021, the economy rebounded strongly, with a
real GDP growth rate of 6.06%.
growth, with notable fluctuations, including a sharp
Slowing Growth:
dip in 2020 due to the pandemic. Here's a breakdown: In 2022 and 2023, the growth rate slowed down,
Real GDP Growth (Adjusted for Inflation): but remained positive.
2019: 2.1% Continued Growth in 2024:
The fourth quarter of 2024 saw a continued
2020: -2.16% (due to the COVID-19pandemic) growth in real GDP, with an annual rate of 2.4%.
2021: 6.06% (strong rebound from the pandemic)
2022: 2.51%
2023: 2.89%
2024 (Q4): 2.77% .
 Over the past five years, the United States has
experienced significant fluctuations in its economic
growth, reflecting the impact of global events, policy
responses, and structural economic trends. In 2020, the
COVID-19 pandemic triggered a sharp economic
contraction of approximately 2.2% as lockdowns,
business closures, and disruptions to global supply
chains severely impacted economic activity. The
federal government responded with expansive fiscal
stimulus packages, such as the CARES Act, while the
Federal Reserve implemented aggressive monetary
As a result, the economy rebounded strongly in 2021,
policies, including near-zero interest rates and large-
posting a remarkable 5.8% GDP growth rate, one of the
scale asset purchases, to stabilize financial markets
highest in decades. This surge was fueled by robust
and support recovery.
consumer spending, a rapid vaccination rollout, and the
reopening of businesses. However, this rapid growth also
contributed to rising inflation, which became a major
concern in subsequent years. By 2022, inflationary
pressures—exacerbated by supply chain bottlenecks, labor
shortages, and geopolitical tensions, such as Russia’s
invasion of Ukraine—led to a slowdown in growth to 1.9%.
The Federal Reserve responded by initiating a series of
interest rate hikes to curb inflation, which tempered
economic expansion but helped prevent runaway price
increases
 In 2023, GDP growth slightly improved
to 2.5%, as inflationary pressures eased
and supply chains adjusted. The
economy continued to demonstrate
resilience, supported by a strong labor
market and steady consumer demand.
By 2024, growth stabilized at around
2.8%, with a notable third-quarter
annualized expansion of 3.1%. This was
largely driven by strong business
investment, increased government
spending on infrastructure, and
continued consumer confidence,
despite elevated borrowing costs due
to higher interest rates
 CONCLUSION
Overall, the U.S. economy in the past five years has
showcased its adaptability in the face of
unprecedented challenges. The interplay between
fiscal and monetary policies has played a crucial role
in steering the country through periods of
contraction and recovery. While long-term structural
issues—such as national debt, labor force
participation, and technological disruptions—remain
points of concern, the economy has demonstrated
remarkable resilience, positioning itself for
continued, albeit moderated, growth in the coming
years.
 2

BUSINESS
CYCLES
 INTRODUCTION
Expansion Peak
• Rising GDP & economic • Maximum economic
An economic cycle, also known as a business growth activity & demand
• Low unemployment, high • Possible inflation due to
cycle, refers to economic fluctuations consumer spending overheating economy
• Interest rates may rise
between periods of expansion and • Increased investments &
to control inflation
business profits
contraction. Factors such as gross domestic
product (GDP), interest rates, total Aashna Vohra
Aashna Vohra

employment, and consumer spending help

determine the current economic cycle stage. Four stages of Business Cycles

Recession Trough
• Declining GDP, falling • Lowest point of
demand economic activity
• Rising unemployment, • High unemployment,
reduced investments weak consumer spending
• Business slowdowns & • Signals the start of
possible stock market drops recovery & future
expansion

Aashna Vohra Aashna Vohra

 • Triggered by the 1929 stock
The Great Depression market crash, bank failures, and
(1929-1939):
U.S. Business
collapse in consumer demand,
leading to 25% unemployment.

Cycles – Post-WWII Boom (1945-

• Driven by massive government
spending, industrial expansion,

Historical 1953): and rising consumer demand,

leading to rapid economic

Trends & Causes growth.

• Caused by high inflation, Federal
1980s Recession Reserve’s aggressive interest rate
hikes, and an oil price shock;
( The U.S. has witnessed 12 major business cycles since WWII,
& Recovery:
each lasting 5-10 years on average) recovery led by deregulation and
tax cuts.
Notable U.S. business cycles:
• Sparked by the subprime
mortgage collapse, banking
2008 Global failures, and credit crunch,
Financial Crisis: resulting in a severe recession and
major government bailouts.

• The fastest GDP contraction in

U.S. history, caused by global
COVID-19 Recession lockdowns, supply chain
(2020): disruptions, and job losses, followed
by a stimulus-driven recovery.
 CAUSES OF BUSINESS CYCLE

Monetary Policy Shifts: Demand & Supply Shocks: Government Fiscal Policies:
Changes in interest rates and Oil price surges, global High public spending or
money supply by the Federal
conflicts, or pandemics excessive taxation
Reserve
affecting production and affecting economic growth.
consumption.
Global Economic
Financial Market Instability:
Influences: Trade wars,
Stock market crashes,
geopolitical tensions, and
banking crises, and credit
international financial
crunches.
crises impacting the U.S.
economy.
 US GOVT. & FEDERAL RESERVE
POLICIES
Federal Reserve (Monetary Policy):
• Interest Rate Adjustments:
tes du rin g re ce ss io ns to enco ur ag e
o Cuts ra U.S. Government (Fiscal Policy):
borrowing and spending. • Stimulus Packages & Direct Aid:
down
o Raises rates during inflation to slow o Cash pa ym en ts, un empl oy m en t be ne fits, an d tax cuts
excessive growth. to boost spending in downturns.
• Quantitative Easing (QE): • Infrastructure & Public Spending:
money t project s to cr ea te job s and
o During crises, buys bonds to inject o Increas es gove rnmen
d low er long -term ra tes. stimulate demand.
into the ec on om y an
• Tax Adjustments:
• Liquidity Support to Banks: disposable
es by pr oviding o Lowers taxes in recessions to increase
o Preven ts finan ci al co llaps
income.
emergency funding. o Raises taxes in expansions to control ov
erheating and
manage deficits.
• Bailouts for Key Industries:
(e.g., banks in
o Financial support for collapsing sectors
2008, airlines in 2020).
[Link]
UNDERSTANDING UNEMPLOYMENT AS A CRUCIAL
MACROECONOMIC VARIABLE
OVERVIEW
MEANING
unemployment refers to a
situation where people who are
able and willing to work at the
IMPORTANCE
going wage are unable to find jobs
despite actively seeking Unemployment is a significant
employment. economic issue because it leads
to:
Lost income and reduced
KEY living standards for the
unemployed.
CHARACTERISTICS Reduced economic output
To be considered unemployed, an and productivity.
individual must be: Social problems, such as
Of working age crime and poverty.
Available and willing to work
Actively seeking work
Unable to find a job
WHY AND HOW ?

Unemployment is a key Unemployment is a significant The best known measure of

macroeconomic problem unemployment is the
indicator of economic
because it signals economic unemployment rate, so in order
health, reflecting the distress, reduces overall to move ahead with the
number of people who production, and can lead to unemployment trends in usa
are actively seeking work social and economic first we need to talk about the
consequences like decreased unemployment rate.
but cannot find it.
consumer spending and
increased reliance on social
welfare programs.
 Rate of
Unemployment

MEANING FORMULA
The unemployment rate is The formula to calculate the
the percentage of the labor unemployment rate is:
force that is actively
Unemployment Rate=
seeking work but unable to
(Unemployed People/Labor
find a job. It is a key
Force)×100
indicator of a country's
economic health.
where the labor force includes
individuals who are employed
or actively looking for work.
 UNEMPLOYMENT SECTORAL
RATE CONTRIBUTION
this graph shows the unemployment rate for this pie chart shows the contribution of
5 yrs (2019-2023) in USA different sectors of USA in providing
employment
8.1%
8 agriculture sector
1.57%
% of
7
total
labour 6
industry sector
force 19.34%
5.3%
5

3.7%
3.6% 3.6%
3 service sector
2019 2020 2021 2022 2023
79.09%
Analysis of Unemployment
Trends (2019–2023)
2020:
2019: COVID-19 Pandemic
Stable Labour Market
and Job Losses
The U.S. economy was experiencing In March 2020, the outbreak of COVID-19 led to
government-imposed lockdowns, causing
low unemployment, around 3.5%,
businesses to close and unemployment to surge.
one of the lowest levels in decades. By April 2020, the unemployment rate skyrocketed
Economic expansion was to 14.7%, the highest level since the Great
supported by strong consumer Depression.
Many workers were furloughed (temporarily laid off
spending, steady job creation, and
with the potential to return).
business growth. Key Factors Contributing to Unemployment Increase:
The labor force participation rate Mass layoffs in industries such as hospitality,
(the percentage of working-age retail, and travel.
people either employed or looking Declining demand for goods and services due to
economic uncertainty.
for work) remained steady.
Supply chain disruptions, affecting production
and employment.
 2021–2022: 2023:
Economic Recovery A More Balanced
and Labour Market Labor Market
Adjustments
As vaccination programs expanded and The unemployment rate remained below
lockdowns lifted, businesses reopened, 4% throughout the year, indicating a
leading to job recovery. strong labor market.
By the end of 2021, unemployment had fallen
Labor Force Participation Rate increased
to around 4%.
However, challenges emerged: to 62.6% by the fourth quarter,
The Great Resignation: A trend where suggesting that more people were
workers voluntarily quit their jobs in search returning to work.
of better opportunities, work-life balance, or
However, job growth slowed slightly due
higher wages.
Labor Shortages: Many businesses struggled
to:
to hire employees, leading to higher job Rising interest rates, which made
vacancy rates. borrowing and business expansion more
Wage Growth: To attract workers, companies expensive.
raised wages, which helped reduce
A cooling labor market as companies
unemployment but also contributed to
inflation. adjusted to post-pandemic conditions.
 Conclusion
The fluctuations in the U.S. unemployment rate from 2019 to 2023
were primarily driven by:
The COVID-19 pandemic and resulting job losses in 2020.
A strong recovery and increased labor market activity in 2021
and 2022.
A stabilization phase in 2023, influenced by rising interest rates
and economic adjustments.
4.
Inflation
 What is inflation?
The inflation rate is the percentage change in the price of products and services from
one year to the next. The most common way to measure inflation is the Consumer
Price Index (CPI) calculated by the Bureau of Labor Statistics (BLS).

Why inflation rate matters? What is a healthy inflation rate?

The inflation rate indicates the overall health of The U.S. Federal Reserve pursues monetary policy to
a country’s economy. keep the annual rate of inflation close to around 2%.
It is used by central banks, economists, and governments This rate is considered low and stable,
to determine what action needs to be taken, without being so low that it may weaken the economy.
if any, to stabilize the economy and keep it healthy.
US
INFLATION 2019
The U.S inflation rate was 1.81%, this was a
period of relative economic stability, with
factors such as a strong labor market and

RATES
stable commodity prices.

Inflation rate was 1.23%, the primary reason

for this decrease being the COVID-19
year 2019-2023 2020 pandemics impact , and a temporary
economic slowdown.

The US experienced a surge in inflation,

reaching levels not seen since the early 1980s,
primarily due to the COVID-19 pandemic's
2021 impact on supply chains, strong consumer
demand, and government stimulus measures.

The surge in US inflation was driven by a

combination of factors, including pandemic-
2022
related supply chain disruptions, increased
demand, government stimulus measures and
russia ukraine war

The country saw a decline from its peak in

2023 2022, reaching 4.1%. This decline was primarily
driven by improvements in the supply chain of
the economy and the Federal Reserve's
monetary policy tightening.
 If the core inflation rate rises significantly
above the Fed’s 2% target inflation rate, the
How the Federal Fed may tighten monetary policy to slow the
economy by hiking the federal fund rate.
Reserve Uses
Monetary Policy to Conversely, the Fed may decrease the
Control Inflation ? discount rate—which is the interest rate for
banks to borrow money from the Federal
Reserve—to stimulate the economy and raise
prices.

Other methods that the Federal Reserve may

use to expand the economy include:
>Engaging in open market operations,
through which the Fed buys or sells U.S.
Treasury securities on the open market
>Reducing the reserve requirement
>Purchasing government securities
5. International
Economics
Understanding the international economy helps us
see how the world is connected
 Introduction
International economics is the study of how nations interact economically. It
includes the exchange of goods and services, the flow of capital, and the
movement of labor. International economics also looks at the impact of
international institutions on economic activity.
It connects nations through trade, finance and investments and includes The
exchange of goods and services between countries, The flow of capital across
borders ,The role of governments in international economic issues and The
regulatory framework that governs how countries, organizations, and
businesses operate internationally.
Benefits of international trade increased variety of goods, lower costs through
economies of scale, and greater efficiency in production. - A strong global
economy helps countries grow and develop.
 Major players in the global economy
The major countries playing a significant role in the global economy, based on GDP,
include the United States, China, Germany Japan, India

Organisations MNCs
•World Trade Organization (WTO):
The WTO sets rules for international trade and resolves
disputes between member countries.
• International Monetary Fund (IMF): Major multinational
The IMF provides financial and technical assistance to corporations (MNCs) in the
countries worldwide, focusing on promoting global
economic stability.
global economy are :
• World Bank:
The World Bank focuses on poverty reduction and the Apple,
improvement of living standards worldwide by providing Amazon,
low-interest loans, interest-free credit, and grants to Microsoft,
developing countries. Walmart.
• United Nations (UN):
The UN is a global organization that aims to promote
peace, security, and cooperation among nations, and it
plays a crucial role in addressing global challenges like
climate change and poverty.
International economy
of USA
- The United States has the world's largest nominal GDP (~$27 trillion as of
2024).
- It is a global leader in trade, finance, and technology.
- The US dollar is the world's primary reserve currency.
US Role in Global Trade
- Top Trading Partners: China, Canada, Mexico, European Union, Japan.
- Major Exports: Aircraft, electronics, medical equipment, oil, and agricultural products.
- Major Imports: Machinery, vehicles, pharmaceuticals, consumer goods.

Foreign Direct Investment (FDI) & Multinational Corporations

The US attracts the highest amount of foreign investment due to a strong legal system and
innovation. Major companies like Apple, Amazon, and Tesla operate globally. Many foreign
companies invest in the US, boosting jobs and technology exchange.
The US Dollar & Global Finance
- The US dollar is used in 60% of global reserves and international transactions.
- The Federal Reserve’s policies (interest rates, inflation control) influence global markets.
- The stock markets (NASDAQ, NYSE) are the world’s largest, affecting global investors.
 Future Outlook
The international economy is always changing

Economic inequality and climate change are interconnected challenges in the

international economy. Wealthy nations have more resources to adapt, while poorer
countries suffer disproportionately from environmental disasters and economic
instability. Climate change disrupts industries, agriculture, and global trade, worsening
inequality

The digital economy, new technologies, and emerging markets are reshaping the
international economy. Innovations like AI, blockchain, and fintech drive efficiency,
global trade, and financial inclusion. Emerging markets benefit from digital
transformation, attracting investments and boosting economic growth. However,
challenges like the digital divide and cybersecurity risks must be addressed for
sustainable and inclusive global development.
 Conclusion
The international economy is a dynamic system driven by trade, investment, and
financial interactions among nations. Institutions like the WTO, IMF, and World Bank play
crucial roles in maintaining stability and promoting economic growth. The United States,
as the world’s largest economy, significantly influences global trade, finance, and
innovation. With a strong currency, leading multinational corporations, and deep
financial markets, the U.S. remains a key player in shaping international economic
policies and trends. However, challenges such as economic inequality, climate change,
and digital transformation must be addressed to ensure a more balanced and
sustainable global economy.
6. Macroeconomic Policy

fiscal policy

monetary
policy
 2019
In 2019, the United States implemented several macroeconomic policies that influenced its
Gross Domestic Product (GDP). According to the Federal Reserve's Monetary Policy Report,
the U.S. economy experienced moderate growth during this period. ​

Fiscal Policy Monetary Policy

The Tax Cuts and Jobs Act (TCJA) of 2017 The Federal Reserve shifted its monetary
continued to impact the economy in 2019 by policy stance in 2019. After a period of
reducing personal and business income taxes. normalizing interest rates, the Fed
This policy aimed to stimulate economic implemented three rate cuts of 0.25%
activity by increasing disposable income and each in July to October, bringing the
encouraging investment. However, the target range for the federal funds rate to
Congressional Budget Office (CBO) reported 1.5%–1.75%. These actions were taken in
that the federal budget deficit widened to response to global developments and
4.5% of GDP in fiscal year 2019, as muted inflation pressures, aiming to
expenditures increased while receipts support sustained economic expansion
remained steady. ​ and strong labormarket conditions.
 2020
In 2020, the United States faced unprecedented economic challenges due to the COVID-19
pandemic, leading to significant shifts in macroeconomic policy aimed at mitigating the
downturn. According to the United States International Trade Commission, the U.S. real
Gross Domestic Product (GDP) contracted by 3.5% in 2020, marking the most substantial
annual decline since 1946. ​

Fiscal Policy Monetary Policy

Response Measures
To counteract the economic fallout, the U.S. The Federal Reserve implemented
government enacted the Coronavirus Aid, aggressive monetary policies to support
Relief, and Economic Security (CARES) Act in the economy, including slashing the
March 2020, a $2.2 trillion stimulus package federal funds rate to near zero and
designed to provide immediate financial launching extensive asset purchase
assistance to individuals, businesses, and programs. These actions aimed to ensure
healthcare providers. This contributed to a liquidity in financial markets and maintain
federal budget deficit of $3.3 trillion for the low borrowing costs, encouraging
fiscal year, equivalent to 16% of GDP, more investment and spending during the
than triple the deficit of 2019. ​ economic crisis.​
 2021
In 2021, the United States implemented significant macroeconomic policies to
stimulate recovery from the COVID-19 pandemic, resulting in notable impacts on its
Gross Domestic Product (GDP).​

Fiscal Policy Monetary Policy

In March 2021, the U.S. government enacted Throughout 2021, the Federal Reserve maintained
the American Rescue Plan Act (ARPA), a $1.9 an accommodative monetary stance by keeping
trillion stimulus package designed to provide the federal funds rate near zero and continuing
direct financial assistance to individuals, substantial purchases of Treasury and mortgage-
extend unemployment benefits, support backed securities. These actions aimed to
small businesses, and allocate funds for support economic recovery by ensuring liquidity
public health initiatives. The Congressional in financial markets and fostering favorable
Budget Office estimated that this legislation borrowing conditions. ​
would increase the level of real GDP by 1.8% in
2021 and by 1.1% in 2022. ​

These combined fiscal and monetary measures contributed to a robust economic

rebound. The U.S. real GDP grew by 5.9% in 2021, marking the fastest annual growth
rate since 1984. The unemployment rate declined from 6.4% in January to 3.9% by
December, reflecting significant improvements in the labour market
 2022
In 2022, the United States implemented macroeconomic policies aimed at addressing the
challenges of post-pandemic recovery, rising inflation, and global economic uncertainties.
According to the World Bank, the U.S. experienced a GDP growth rate of 1.9% in 2022, with a
nominal GDP of $25.44 trillion and a per capita GDP of $76,329.60. ​

Fiscal Policy Monetary Policy

The U.S. government continued to provide In response to escalating inflation, the Federal
fiscal support to sustain economic recovery Reserve shifted its monetary policy stance in
from the COVID-19 pandemic. While major 2022. After maintaining near-zero interest
stimulus packages like the American Rescue rates to support the economy during the
Plan Act were enacted in 2021, their effects pandemic, the Fed began increasing the federal
extended into 2022, supporting consumer funds rate to curb inflationary trends. This
spending and business investment. However, tightening aimed to stabilize prices but also
concerns about rising public debt and raised concerns about potential dampening
inflationary pressures led to debates on the effects on economic growth.
sustainability of expansive fiscal policies.​
 2023
According to the U.S. Department of the Treasury, the U.S. economy outperformed
expectations in 2023, demonstrating growth in economic output, resilience in the labor
market, and a deceleration in inflation. ​

Fiscal Policy Monetary Policy

The fiscal landscape in 2023 was influenced by the
implementation of the SECURE 2.0 Act, a series of incremental The Federal Reserve maintained a restrictive
policy reforms designed to enhance retirement security.
monetary policy throughout 2023 to combat
These provisions, phased in over time, included reforms such
as a matching credit for contributions to retirement accounts elevated inflation levels. By keeping interest
by low- and middle-income households. ​ rates high, the Fed aimed to stabilize prices
Additionally, in May 2023, Congress and President Biden while navigating the delicate balance between
addressed the debt ceiling by enacting the Fiscal curbing inflation and sustaining economic
Responsibility Act of 2023. This legislation averted a potential
growth. ​
default and introduced spending restrictions for two years,
imposed new work requirements on certain aid recipients,
and streamlined processes for infrastructure and energy
projects. ​
 Economic
Outcomes
These policy measures contributed to a resilient economic
performance:​
• GDP Growth: Real gross domestic product (GDP) grew by 2.5% in
2023, significantly outpacing growth in other G7 nations. ​​
• Inflation: Inflation rates showed signs of deceleration, with the
rate measured at 6.4% in January 2023 and decreasing to 3.1% by
December 2023. This decline indicates progress toward price
stability, although inflation remained above the Federal Reserve's
long-term target. ​
 Conclusion
Over the past five years, the U.S. economy has faced a sharp
pandemic-induced recession, a strong but uneven recovery, and
high inflation, prompting aggressive Fed rate hikes. Unemployment
spiked but returned to pre-pandemic levels, while global trade
tensions and geopolitical events added uncertainty. Fiscal stimulus
initially boosted growth, but tighter monetary policy now aims to
control inflation without stalling the economy. The U.S. remains
resilient but faces ongoing economic challenges.
 Thank you!
PRESENTED BY :

ANNANYA BHALLA FALGUNI PANDEY LAVANYA AASHNA VOHRA

240401 240900 241188 240643

AASHNA BARNABAS ISHANIKA DHAWAN KAAVYA SHUKLA

240163 240460 241147

VIDHI BANSAL
240574