United States: Economic and political overview

Economic Overview

The United States is the world's largest economy ahead of China. The country recovered well from the COVID-19-induced crisis, with GDP rebounding by 6.1% in 2021, followed by 2.5% in 2022 (IMF). According to estimates by the Bureau of Economic Analysis, in 2024, real GDP grew by 2.8% in 2024, slightly down from 2.9% in 2023. The 2024 growth was driven by higher consumer spending, investment, government spending, and exports, while imports also rose. More specifically, consumer spending rose due to gains in services and goods. Healthcare, particularly hospital and outpatient services, led service growth; whereas recreational goods and vehicles, driven by information processing equipment and motor vehicles, boosted goods spending. Government spending increased at both state and federal levels. State and local growth were driven by employee compensation, while federal growth was led by defence expenditures (data Bureau of Economic Analysis). According to the IMF, the rate of economic activity is anticipated to remain relatively stable in 2025, at 2.7%, slowing to 2.1% the following year.

Concerning public finances, in fiscal year 2024 (which ended on September 30), the federal budget deficit rose to USD 1.8 trillion, up USD 138 billion (8%) from 2023, equaling 6.4% of GDP (above the 50-year average of 3.8%). Revenues increased 11% (USD 479 billion), driven by higher individual income taxes, while outlays rose 10% (USD 617 billion), led by education (USD 309 billion). Interest payments on public debt grew 34% to USD 949 billion. Federal debt reached 97.8% of GDP, up from 96% in 2023 (data Congressional Budget Office). The CBO forecasted a USD 1.87 trillion federal budget deficit for fiscal year 2025, with a further decrease in 2026 (USD 1.71 trillion), hitting USD 2.7 trillion in 2035. As per the IMF, persistent high deficits and interest expenses have led to a rise in general government debt, which was estimated at 121% of GDP in 2024. Early 2025 data by the U.S. Bureau of Labor Statistics show that inflation increased 2.9% over the 12 months ending in December. The core index (excluding food and energy) rose 3.2%, while the energy index fell 0.5%. The food index grew by 2.5% over the same period. Easing inflation prompted the Fed to lower its federal funds rate by 0.25% to 4.25%-4.5% in January 2025, in order to balance employment and price stability. The IMF forecasts an inflation rate of 1.9% in 2025, followed by an average of 2.1% in the two following years.

Hiring has eased following significant U.S. central bank rate hikes in 2022 and 2023. However, the economy remained strong due to a resilient labor market, characterized by historically low layoffs and wage-driven consumer spending. The IMF estimated an unemployment rate of 4.1% at the end of 2024, with an expected increase to 4.4% this year. Overall, American citizens enjoy one of the highest GDPs (PPP) per capita in the world, estimated at more than USD 89,680 in 2025 by the IMF. Nevertheless, inequalities are still significant, as they tend to be worsened by current public health policies (with rising numbers of people without health insurance). In 2023, the poverty rate was 11.1%, with 36.8 million people in poverty, a level similar to the previous year (U.S. Census – latest data available).

Main Sectors of Industry

The United States is a highly industrialised country with high levels of productivity and the use of modern technologies. Key sectors include agriculture (corn, soy, beef, and cotton); manufacturing of machinery, chemical products, food, and automobiles; and a booming tertiary market focused on finance, new technologies, insurance, real estate, rentals, and leases. The American agricultural sector is without doubt one of the world's largest, with California alone producing more than one-third of the country's vegetables and two-thirds of its fruits and nuts. Nevertheless, agriculture only accounts for 0.9% of GDP and employs 2% of the workforce (World Bank, latest data available). Based on data from the Bureau of Economic Analysis, agriculture, food, and related industries contributed approximately USD 1.537 trillion to U.S. GDP in 2023, accounting for 5.5%. The output from American farms made up USD 222.3 billion of this total, representing around 0.8% of GDP. The USDA’s December 2024 forecast projected net farm income at USD 140.7 billion—a 4.1% drop from 2023 and a 22.6% decline from the 2022 peak. Inflation-adjusted losses deepen by 6.3%. In 2024, U.S. corn production was estimated at 14.9 billion bushels, down 3% from 2023. Rice rose 2% to 222 million cwt, soybeans increased 5% to 4.37 billion bushels, and cotton surged 19% to 14.4 million 480-pound bales (data USDA).

Including a broad range of activities, the industrial sector contributes to 17.6% of GDP and employs 19% of the workforce (World Bank). Besides the industries mentioned above, the country is also the world leader in the aerospace and pharmaceutical industries. Thanks to its abundant natural resources, the United States has become a leader in the production of several minerals and has been able to maintain diversified production. The country is the world's largest producer of liquified natural gas, aluminium, electricity and nuclear energy. It is the world's third-largest oil producer and has also developed shale gas extraction on a large scale. In terms of value-added, the U.S. is the second-largest manufacturing nation in the world behind China.  The manufacturing sector alone contributes USD 2.65 trillion to the economy, employs nearly 13 million workers, and represents 10.3% of GDP (U.S. Department of Commerce).

The American economy is essentially based on services: the tertiary sector accounts for more than three-fourths of GDP (76.4%) and employs 79% of the country's workforce (World Bank). The United States hosts the world's largest and most liquid financial markets. In 2023, the finance and insurance sector accounted for 7.3% of GDP (U.S. Trade Dept.). At the end of the same period, the U.S. banking system had USD 23.7 trillion in assets and a quarterly net income of USD 38.4 billion. The latest figures from the Bureau of Economic Analysis show that U.S. private services-producing industries’ value-added increased by 4% quarter-on-quarter in Q3/2024, the leading contributors to the increase being retail trade (led by motor vehicles and parts dealers); health care and social assistance (led by ambulatory health care services); and information (led by data processing, internet publishing, and other information services). According to the World Travel & Tourism Council (WTTC), the U.S. is the world's leading travel & tourism market, with a record USD 2.36 trillion contribution to the economy in 2023.

Source: World Bank, Latest data available.

Indicator of Economic Freedom

Score:

74,8/100

World Rank:

20

Regional Rank:

3

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

Business environment ranking

Score:

8.30/10

World Rank:

7/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2021-2025

Sources of General Economic Information

Ministries

Department of the Treasury
Department of Commerce
Department of Labor
Department of Agriculture
International Trade Administration

Statistical Office

Census Bureau

Central Bank

The Federal Reserve

Stock Exchange

New York Stock Exchange
NASDAQ
NYSE American Options
NYSE Chicago Stock Exchange
Chicago Mercantile Exchange
Chicago Board Options Exchange
Minneapolis Grain Exchange

Other Useful Resources

Bureau of Economic Analysis
Financial Times
The Economist - US
The Wall Street Journal

Main Online Newspapers

New York Times
Washington Post
USA Today
Los Angeles Times
San Francisco Chronicle
Atlanta Journal Constitution
Boston.com
Miami Herald
Financial Times
Bloomberg

Economic Portals

National Bureau of Economic Research
U.S. Census Bureau
Bureau of Labour Statistics
Bureau of Economic Analysis
White House

Political Outline

Current Political Leaders

President: Donald J. TRUMP (since 20 January 2025) - Republican Party
Vice President: James David VANCE (since 20 January 2025) - Republican Party

Next Election Dates

Presidential: November 2028
House of Representatives: November 2026
Senate: November 2026

Current Political Context

Internally, the year 2024 was characterized by the Presidential election. In a historic move, President Joe Biden withdrew from the 2024 presidential race on July 21, 2024. Following Biden's exit, Vice President Kamala Harris became the Democratic nominee, selecting Minnesota Governor Tim Walz as her running mate, while former President Donald Trump won the race as the Republican’s candidate, with JD Vance as running mate. Donald Trump was elected president in November after winning the electoral college and the popular vote. Republicans also performed well in congressional elections, giving the GOP a political trifecta that includes control of the House of Representatives and the Senate. With a focus on reviving the American manufacturing and energy sectors, the new Trump administration, which took office in 2025, is anticipated to prioritize boosting economic development through additional tax cuts and deregulation. With ongoing attempts to secure the U.S.-Mexico border and restrict illegal immigration, policies are likely to remain stringent. Regarding national security, it is expected that the administration will place a higher priority on defence spending and pursue a more assertive foreign policy, especially with regard to China and Iran.
Concerning foreign and defence policy matters, the United States continued its strong support for Ukraine amid its ongoing conflict with Russia. The U.S. provided significant military aid, including advanced weaponry, training, and intelligence-sharing, alongside humanitarian assistance. President Trump, despite his initial calls for negotiation, reaffirmed the U.S. commitment to Ukraine’s defence and called for a negotiation with Vladimir Putin to end the conflict. Together with bipartisan congressional support, the Biden administration stressed Israel's right to self-defence in the context of the Israel-Hamas war while urging efforts to save civilian lives and find a lasting settlement.
Finally, U.S.-China ties have been tight over the past year due to persistent disputes over trade, technology, and geopolitical influence. Tensions between the two countries increased when former President Donald Trump announced plans to increase tariffs on Chinese goods in an effort to address trade imbalances.

Main Political Parties

Two political parties dominate U.S. politics:

- The Democratic Party: socially progressive, favours government intervention to regulate and balance the market economy.
- The Republican Party (also known as the Grand Old Party, GOP): socially conservative, supports free-market capitalism and emphasises national defence.

In addition to the two major parties, there are several other political parties. These include the Reform Party, the Libertarian Party, the Green Party, and the Constitution Party, among others, such as the Natural Law Party, the Party for Socialism and Liberation, the Working Class Party, and the Working Families Party.

Type of State

The United States is a federal republic, founded on the principles of representative democracy, with three branches of Government designed to balance each other’s powers. It consists of 50 largely self-governing states with limited sovereignty under federal authority.

Executive Power

The President is the Chief of State, Commander-in-Chief of the Armed Forces, and the Head of Government. The President is elected by an Electoral College, with electors chosen by voters in each state, to serve a four-year term. These powers are checked by the U.S. Congress, which has legislative authority and oversight responsibilities. The Cabinet is appointed by the President and subject to approval by the Senate.

Legislative Power

The United States has a bicameral legislature. Congress consists of two chambers: the Senate (upper house) and the House of Representatives (lower house). The Senate has the power to confirm or reject presidential appointments, such as cabinet members and federal judges, and to ratify treaties. It is composed of 100 senators. The House of Representatives has the exclusive power to initiate revenue bills, which may be amended or rejected by the Senate. It is composed of 435 members. The President has the power to veto legislation passed by Congress, but Congress can override the veto with a two-thirds majority vote in both chambers.

Indicator of Freedom of the Press

World Rank:

44/180

Indicator of Political Freedom

Ranking:

Free

Political Freedom:

2/7

Civil Liberties:

2/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House