2020 Index of Economic Freedom

United States

OVERALL SCORE76.6
WORLD RANK17
Rule of Law

Property Rights81.8

Judicial Effectiveness83.7

Government Integrity77.2

Government Size

Tax Burden74.6

Government Spending56.5

Fiscal Health54.3

Regulatory Efficiency

Business Freedom83.3

Labor Freedom87.9

Monetary Freedom75.5

Open Markets

Trade Freedom79.8

Investment Freedom85.0

Financial Freedom80.0

Create a Comparison Chart

See how United States compares to another country using any of the measures in the Index.

vs
Close
Download PDF
Quick Facts
  • Population:
    • 327.4 million
  • GDP (PPP):
    • $20.5 trillion
    • 2.9% growth
    • 2.4% 5-year compound annual growth
    • $62,606 per capita
  • Unemployment:
    • 3.9%
  • Inflation (CPI):
    • 2.4%
  • FDI Inflow:
    • $251.8 billion

The United States’ economic freedom score is 76.6, making its economy the 17th freest in the 2020 Index. Its overall score has decreased by 0.2 point due primarily to a lower trade freedom score. The United States is ranked 3rd among 32 countries in the Americas region, and its overall score is well above the regional and world averages.

Economic freedom has declined in America over the past decade, primarily because of excessive government spending and intrusive regulation of the health care and financial sectors, although scores have stabilized in recent years. GDP growth has been good recently as well.

Reckless deficit spending by Congress and the Administration under both parties explains the weakest Index indicators: government spending and fiscal health. Approval of the recently renegotiated NAFTA (now the United States–Mexico–Canada Agreement) should help to ensure continued growth, and resolution of the U.S.–China trade dispute could boost trade freedom.

Close

Background

The United States has one of the world’s wealthiest and most diversified economies. President Donald Trump sparked relatively robust economic growth by reducing burdensome regulations and signing a major tax reform bill into law, but deficit spending has continued unchecked. The Administration’s protectionist trade policies will increasingly be a drag on economic growth if newly applied tariffs are not reversed. The Democratic Party took control of the House of Representatives in January 2019, dimming prospects for passage of major legislation affecting economic policy before the 2020 election. Although services account for about 80 percent of GDP, the U.S. remains the world’s second-largest producer of manufactured goods and the leader in research and development.

Rule of LawView Methodology

Property Rights 81.8 Create a Graph using this measurement

Judicial Effectiveness 83.7 Create a Graph using this measurement

Government Integrity 77.2 Create a Graph using this measurement

Private property rights are widely respected, but the federal government still owns about 28 percent of all land. Contracts are enforced effectively. The judiciary functions independently and predictably, although the judicial appointments process is subject to increasing politicization. Corruption does not represent a significant business risk, and government actively enforces a well-established anticorruption legislative framework.

Government SizeView Methodology

The top individual income tax rate is 37 percent, and the top corporate tax rate is 21 percent. The overall tax burden equals 27.1 percent of total domestic income. Government spending has amounted to 38.1 percent of the country’s output (GDP) over the past three years, and budget deficits have averaged 4.0 percent of GDP. Public debt is equivalent to 105.8 percent of GDP.

Regulatory EfficiencyView Methodology

The legal and political environments generally support entrepreneurial activity. Tax and regulatory reforms have pushed the unemployment rate to its lowest level in over 50 years, with unemployment among minority demographic groups at record lows. However, agricultural subsidies have been increased to offset the effects of increased tariffs, and subsidies continue for health care, so-called green energy, and various forms of corporate welfare.

Open MarketsView Methodology

The total value of exports and imports of goods and services equals 27.1 percent of GDP. The average applied tariff rate is 2.6 percent, and over 2,000 nontariff measures are in force. Protectionist policies have created considerable uncertainty for businesses, adding to the overall cost of trade and investment. The financial sector, which is among the most developed in the world, is competitive and stable.

Country's Score Over Time

View Chart of Scores over Time

Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Canada78.20.5
2Chile76.81.4
3United States76.6-0.2
4Colombia69.21.9
5Uruguay 69.10.5
6Jamaica 68.5-0.1
7Saint Lucia68.2-0.5
8Peru67.90.1
9Panama 67.20.0
10Saint Vincent and the Grenadines66.81.0
11Mexico661.3
12Costa Rica 65.80.5
13The Bahamas64.51.6
14Guatemala 641.4
15Paraguay 631.2
16El Salvador 61.6-0.2
17Barbados61.4-3.3
18Honduras 61.10.9
19Dominican Republic60.9-0.1
20Dominica60.8-2.8
21Trinidad and Tobago58.31.3
22Belize57.42.0
23Nicaragua 57.2-0.5
24Guyana56.2-0.6
25Brazil53.71.8
26Argentina53.10.9
27Haiti52.3-0.4
28Ecuador51.34.4
29Suriname49.51.4
30Bolivia42.80.5
31Cuba26.9-0.9
32Venezuela 25.2-0.7
See Entire Region List ›

View all countries ›

Back to Top