The current state of the economy of the United States Essay

The current state of the economy of the United States - Essay Example It is calculated by adding up annual expenditure on goods and services in 4 sectors. The first sector is ‘Personal Consumption Spending,’ involving expenditure on durable goods (like cars and televisions), non-durable goods (like food and clothes), and personal services (like manicures and haircuts). The second sector is ‘Private Investment Spending,’ including expenditure like purchases of real estate, plant and machinery by corporations. The third sector is ‘Government Spending,’ featuring expenditure on goods like armaments and services like wages of public school teachers. The fourth sector is ‘Net Exports,’ which is the value of goods and services exported abroad, minus the value of goods and services imported from other countries (The World Book Encyclopedia). GDP is the most widely used measure to analyze the prosperity of the nation. The U.S is considered the world’s most prosperous economy as it possesses the highest GDP in the world. In 2000 its GDP purchasing power parity which was $ 9.82 trillion, rose to $ 10.13 trillion in 2001, $ 10.47 trillion in 2002, $ 10.96 trillion in 2003, $ 11.71 trillion in 2004, $ 12.46 trillion in 2005 and $ 12.98 trillion in 2006. U.S GDP figures have shown a healthy, continuously rising trend, rising by 3.16 % between 2001 and 2001, 3.36% between 2001 and 2002, 4.68% between 2002 and 2003, 6.84% between 2003 and 2004, 6.40% between 2004 and 2005 and 4.17% between 2005 and 2006 (Cia.gov). As compared to the U.S, other world countries lagged far behind. In 2004, as against the U.S GDP purchasing power parity of 11.71 trillion, China ranked a distant second at 7.272 trillion, followed by an even most distant group of countries led by Japan at 3.745 trillion, India at 3.319 trillion, Germany at 2.3 62 trillion, the U.K at 1.782 trillion, France at 1.737 trillion and Italy at 1.609 trillion