The American Economy—An Overview - The Main Components Of The American Economy

America's rise as an economic leader since the nineteenth century is largely due to its combination of ample natural resources, a motivated and educated labor force, and a great number of technological innovations.

Natural Resources

Natural resources are commodities that can be taken from the environment and either used in the manufacture of other products or sold in their original form. Forestry, fishing, and mining are classified as natural resources industries. Natural resources are considered either renewable or nonrenewable. Renewable resources are those that can be replanted or restocked (such as trees and fish), while nonrenewable resources, such as minerals, cannot be replaced once they become depleted. A country's natural resources can affect the overall health of its economy. As the fourth-largest country in the world, at 3.7 million square miles, the United States has direct access to two oceans; numerous rivers and waterways; coal, oil, and mineral deposits; fertile soil for farming; and many heavily forested areas, all of which make it one of the richest geographical regions on the planet.

Labor

The highly skilled and well-trained U.S. labor force is one of the most important elements of America's economic

TABLE 1.6

Durable goods shipments and new orders, 2003–04
[Millions of dollars]
	Seasonally adjusted						Not seasonally adjusted1
	Monthly			Percent change			Monthly			Year to date
Item	Sep 20042	Aug 2004r	Jul 2004	Aug–Sep2	Jul–Augr	Jun-Jul	Sep 20042	Aug 2004r	Sep 2003	2004	2003	Percent change 04/03
Durable goods
Total:
Shipments	199,082	201,412	197,698	−1.2	1.9	0.5	214,739	202,481	197,413	1,762,741	1,589,674	10.9
New orders4	195,700	195,283	196,431	0.2	−0.6	1.9	206,585	192,378	189,075	1,728,287	1,542,002	12.1
Excluding transportation:
Shipments	145,163	146,770	145,465	−1.1	0.9	2.1	156,572	147,038	140,411	1,275,391	1,131,359	12.7
New orders4	143,167	140,783	136,967	1.7	2.8	0.1	151,317	138,371	134,646	1,237,868	1,085,267	14.1
Excluding defense:
Shipments	189,575	191,527	188,000	−1.0	1.9	0.5	204,234	193,025	187,186	1,675,789	1,510,554	10.9
New orders4	184,037	185,775	187,041	−0.9	−0.7	3.0	195,477	185,327	180,391	1,641,201	1,457,825	12.6
Manufacturing with unfilled orders:
Shipments	135,930	137,321	136,338	−1.0	0.7	1.7	145,784	137,043	132,609	1,197,365	1,077,817	11.1
New orders4	139,719	138,691	142,593	0.7	−2.7	3.9	145,653	134,210	130,747	1,225,983	1,081,634	13.3
Primary metals:
Shipments	14,577	14,521	14,217	0.4	2.1	3.2	14,894	14,919	11,041	123,136	99,023	24.4
New orders	14,600	14,925	15,020	−2.2	−0.6	7.5	14,324	15,396	10,729	126,911	98,895	28.3
Fabricated metal products:
Shipments	23,240	23,182	23,173	0.3	0.0	1.5	24,409	24,288	21,388	203,598	184,143	10.6
New orders	23,054	23,528	23,047	−2.0	2.1	−0.3	23,329	24,590	21,392	209,708	184,088	13.9
Machinery:
Shipments	25,300	24,879	25,116	1.7	−0.9	3.2	26,413	24,038	22,088	219,178	189,666	15.6
New orders	25,933	25,196	24,783	2.9	1.7	0.8	26,716	23,813	21,767	224,408	188,164	19.3
Computers and electronic products:
Shipments	38,542	39,972	39,372	−3.6	1.5	3.0	44,181	37,730	41,682	340,743	301,466	13.0
New orders4	35,562	32,545	30,741	9.3	5.9	−4.2	40,042	28,434	36,582	285,336	256,193	11.4
Computers and related products:
Shipments	8,051	8,548	8,643	−5.8	−1.1	6.5	9,881	7,784	10,317	73,815	66,266	11.4
New orders	8,630	8,305	8,261	3.9	0.5	−5.1	10,391	7,657	10,327	73,718	66,978	10.1
Communications equipment:
Shipments	6,914	7,489	7,019	−7.7	6.7	3.3	7,710	6,927	7,798	60,983	54,900	11.1
New orders	9,576	7,060	6,597	35.6	7.0	5.0	10,522	5,218	8,722	62,189	60,005	3.6
Semiconductors:
Shipments	7,171	7,499	7,522	−4.4	−0.3	5.1	8,023	7,270	6,476	63,072	51,489	22.5
New orders4	(NA)	(NA)	(NA)	(NA)	(NA)	(NA)	(NA)	(NA)	(NA)	(NA)	(NA)	(NA)
Electrical equipment, appliances, and components:
Shipments	8,868	9,192	9,054	−3.5	1.5	3.6	9,889	9,137	9,528	79,031	75,230	5.1
New orders	8,993	9,447	9,040	−4.8	4.5	6.7	9,766	9,331	9,327	80,653	75,238	7.2
Transportation equipment:
Shipments	53,919	54,642	52,233	−1.3	4.6	−3.7	58,167	55,443	57,002	487,350	458,315	6.3
New orders	52,533	54,500	59,464	−3.6	−8.3	6.5	55,268	54,007	54,429	490,419	456,735	7.4
Motor vehicles and parts:
Shipments	38,266	38,617	36,671	−0.9	5.3	−3.9	40,832	39,971	40,367	347,991	329,752	5.5
New orders	38,215	38,889	36,723	−1.7	5.9	−4.5	40,518	39,991	40,615	349,087	329,664	5.9
Nondefense aircraft and parts:
Shipments	6,271	6,312	5,904	−0.6	6.9	−5.2	6,938	5,906	6,216	52,635	49,537	6.3
New orders	5,614	6,705	12,475	−16.3	−46.3	103.5	6,580	6,614	5,698	58,109	42,534	36.6
Defense aircraft and parts:
Shipments	3,498	3,730	3,542	−6.2	5.3	−4.4	4,001	3,516	3,858	33,138	29,071	14.0
New orders	2,549	2,789	3,007	−8.6	−7.2	−41.6	2,281	1,600	3,292	26,475	32,567	−18.7

success. Education policy plays an important role in building a solid base of workers. Table 1.7 shows government spending on education and job training. Over the forty-two-year period covered by the table, total spending—reflected as a percentage of Gross Domestic Product—has declined. However, as Figure 1.1 shows, the

NA Not Available
rRevised
1Shipments and new orders are the totals for the period and are adjusted for trading-day and calendar-month variations; unfilled orders and total inventories are as of the end of the period and are not adjusted for trading-day or calendar-month variations.
2Based on advance sample. Estimates of manufacturers' shipments, inventories, and orders are subject to survey error and revision. One major component of survey error is nonsampling error, which includes errors of coverage, response and nonreporting. Since the survey panel is not a probability sample, estimates of sampling error cannot be calculated.
3The capital goods industries include nondefense: small arms and ordnance; farm machinery and equipment; construction machinery; mining, oil, and gas field machinery; industrial machinery; vending, laundry, and other machinery; photographic equipment; metalworking machinery; turbines and generators; other power transmission equipment; pumps and compressors; material handling equipment; all other machinery; electronic computers; computer storage devices; other computer peripheral equipment; communications equipment; search and navigation equipment; electromedical, measuring, and control instruments; electrical equipment; other electrical equipment, appliances, and components; heavy duty trucks; aircraft; railroad rolling stock; ships and boats; office and institutional furniture; and medical equipment and supplies. Defense capital goods include: small arms and ordnance, communications equipment, aircraft; missiles, space vehicles, and parts, ships and boats, and search and navigation equipment.
4Data on new and unfilled orders are not available for the semiconductor industry. Estimates and percent changes for new orders and unfilled orders exclude semiconductor industry data. Inventories for semiconductor industry data are included in computers and electronic products and total durable goods industries, but are not shown separately.
SOURCE: "Table 1. Durable Goods Manufacturers' Shipments and New Orders," in U.S. Department of Commerce News, February 26, 2004, U.S. Census Bureau, http://www.census.gov/indicator/www/m3/adv/pdf/table1a.pdf (accessed January 4, 2005)
All other durable goods:
Shipments	34,636	35,024	34,533	−1.1	1.4	0.0	36,786	36,926	34,684	309,705	281,831	9.9
New orders	35,025	35,142	34,336	−0.3	2.3	−0.9	37,140	36,807	34,849	310,852	282,689	10.0
Capital goods:3
Shipments	71,583	72,945	71,777	−1.9	1.6	2.0	78,687	69,961	73,771	632,981	568,359	11.4
New orders	75,785	73,203	78,012	3.5	−6.2	6.0	81,278	66,380	73,036	649,562	576,246	12.7
Nondefense capital goods:
Shipments	63,440	64,513	63,458	−1.7	1.7	1.8	69,911	61,813	65,256	558,729	501,033	11.5
New orders	65,179	64,818	69,879	0.6	−7.2	9.3	71,318	60,047	65,753	573,003	503,596	13.8
Excluding aircraft:
Shipments	60,860	61,902	61,415	−1.7	0.8	2.3	67,153	59,484	62,456	537,261	478,662	12.2
New orders	63,106	61,533	61,322	2.6	0.3	0.6	68,768	56,729	63,124	545,696	486,478	12.2
Defense capital goods:
Shipments	8,143	8,432	8,319	−3.4	1.4	3.5	8,776	8,148	8,515	74,252	67,326	10.3
New orders	10,606	8,385	8,133	26.5	3.1	−15.8	9,960	6,333	7,283	76,559	72,650	5.4

United States is second only to Switzerland in its per-student spending. Productivity measures are used to track labor effectiveness—namely, how much work a single worker can accomplish in a certain period of time and how efficient a worker is in his or her job. Productivity generally increases with advances in technology. Table 1.8 shows productivity as measured by GDP per job and per hour worked, as well as average rates of growth, between 1961 and 2003.

Technology

American companies have long been at the forefront of technological innovation, pioneering such developments over the years as steam engines, factory assembly lines, and computer software. These new technologies have increased both worker productivity and business efficiency, which, in turn, allows companies to deliver goods and services at lower costs to consumers, stimulating spending and boosting the economy. At the same time, advances in technology can affect the job market. At times new technologies lead to more jobs as workers are needed to design, manufacture, and service them. On the other hand, such advances can also cause job losses as increased efficiency streamlines processes so that fewer employees are needed.