Hills of corn in Kansas are reminders that agriculture, accounting for a small share of GDP, remains an important part of the U.S. economy. (© AP Images/Sandra Milburn/The Hutchinson News)
A Service Economy
Services produced by private industry accounted for 67.8 percent of U.S. gross domestic product in 2006, with real estate and financial services such as banking, insurance, and investment on top. Some other categories of services are wholesale and retail sales; transportation; health care; legal, scientific, and management services; education; arts; entertainment; recreation; hotels and other accommodation; restaurants, bars, and other food and beverage services.
Production of goods accounted for 19.8 percent of GDP: manufacturingsuch as computers, autos, aircraft, machinery12.1 percent; construction, 4.9 percent; oil and gas drilling and other mining, 1.9 percent; agriculture, less than 1 percent.
Federal, state, and local governments accounted for the rest12.4 percent of GDP.
The most rapidly expanding sectors are financial services; professional, scientific, and technical services; durable goods manufacturing, especially computers and electronic products; real estate; and health care.
Decreasing their share of GDP growth are agriculture and mining and some other kinds of manufacturing, such as textiles. "Low-value, commodity-based manufacturing is disappearing from the United States, moving to developing nations where routine manufacturing can be performed at low cost," the Council on Competitiveness says.
Services such as banking, retail sales, transportation, and health care account for two-thirds of the value of U.S. GDP.
Yet the United States remains the world's top manufacturing country, its factories producing goods worth $1.49 trillion in 2005, 1.5 times the level in the next country, Japan. And the value of U.S. agricultural production trails that of only China and India.
Even though agriculture now has a small share of GDP, farmers remain economically and politically powerful forces. In 2002 the market value of U.S. farm production amounted to more than $200 billion, including $45 billion for cattle and calves; nearly $40 billion for grains, such as corn and wheat, and oilseeds such as soybeans; nearly $24 billion for poultry and eggs; $20 billion for milk and other dairy products; and $12 billion for hogs and pigs.
Even though the United States has more than 2 million farms, a relatively tiny number of big corporate farms dominate1.6 percent of farms in 2002 accounted for half of all sales.
Despite its overall trade deficit, the United States has a surplus in agriculture. U.S. farm exports in 2007 are forecast at $78 billion, with the largest share going to Asian countries, although Canada and Mexico account for the largest share of recent growth in agricultural exports. About one-fourth of U.S. farm output is exported.
While the United States maintains a trade surplus in services, it runs a large deficit in merchandise goods trade.
The United States also maintains a trade surplus in services, $79.7 billion in 2006. The biggest U.S. services export category was travel by foreigners to the United States, $85.8 billion that year.
In contrast, the United States runs a large and growing deficit in merchandise goods trade. While the United States exported more than $1 trillion in goods in 2006, it imported more than $1.8 trillion worth.
By far the top imports that year were autos and auto parts, $211.9 billion, and crude oil, $225.2 billion. The top sources of U.S. imports were Canada, China, Mexico, Japan, and Germany.
Construction accounts for nearly 5 percent of the U.S. economy; here a worker fits pipe on a gasoline station under construction in Georgia. (© AP Images/Ric Feld)
Among the top U.S. exports in 2006 were autos and auto parts, semiconductors, and civilian aircraft. The top U.S. export destinations were Canada, Mexico, Japan, China, and the United Kingdom.
In 2000-2006, even though U.S. goods exports increased 33 percent, U.S. goods imports went up even faster, 52 percent; the goods deficit nearly doubled over those years.
The $758.5 billion trade deficit amounted to 5.7 percent of 2006 GDP, a level viewed as unsustainable by many economists because it relies on continuing inflows of foreign investment to pay for it.
But what makes the U.S. economy so dynamic?