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- GDP (PPP):
- $17.9 trillion
- 2.4% growth
- 2.0% 5-year compound annual growth
- $55,805 per capita
- Inflation (CPI):
- FDI Inflow:
Large budget deficits and a high level of public debt, both now reflected in the Index methodology, have contributed to the continuing decline in America’s economic freedom. Having registered its lowest economic freedom score ever, the United States is no longer among the world’s 15 freest economies.
The anemic economic recovery since the great recession has been characterized by a lack of labor market dynamism and depressed levels of investment. The substantial expansion of government’s size and scope, increased regulatory and tax burdens, and the loss of confidence that has accompanied a growing perception of cronyism, elite privilege, and corruption have severely undermined America’s global competitiveness.
The United States, with the world’s largest and most diversified economy, is still suffering through a protracted period of slow growth that has held down job creation and labor market participation. The population remains sharply divided over appropriate remedies. Donald Trump, elected President in November 2016, has promised a sharp break with the regulatory, tax, and trade policies of his predecessor, including dismantling such major legislation as the Affordable Care Act and the Dodd–Frank financial regulatory bill. Because of its size and inherent strength, the U.S. economy has shown considerable resilience. Services account for about 80 percent of GDP, but manufacturing output and productivity are at historic highs.
Although property rights are guaranteed and the judiciary functions independently and predictably, protection of property rights has been uneven. For example, rising civil asset forfeitures by law enforcement agencies and a vast expansion of occupational licensing have directly encroached on U.S. citizens’ property rights. The Pew Research Center reported in late 2015 that just 19 percent of Americans trust the government always or most of the time.
The top individual income tax rate is 39.6 percent, and the top corporate tax rate remains among the world’s highest at 35 percent. The overall tax burden equals 26.0 percent of total domestic income. Government spending at all levels has amounted to 38.3 percent of total output (GDP) over the past three years, and federal budget deficits have averaged 4.1 percent of GDP. Public debt is equivalent to 105.8 percent of GDP.
The number of federal regulations has increased substantially, raising total annual compliance costs to more than $100 billion in just seven years. Labor regulations are not rigid, but other government policies restrict dynamic job growth. Federal welfare programs, combined with federal subsidies for agriculture, health care, green energy, corporate welfare, and other special interests, contribute to large deficits.
Trade is moderately important to the United States economy; the value of exports and imports taken together equals 28 percent of GDP. The average applied tariff rate is 1.4 percent. Over one-third of all land is owned by government. The overall financial sector remains competitive, but the banking sector remains vulnerable to uncertainty and bureaucratic interference related to the 2,300-page Dodd–Frank legislation.