FREE ESSAY ON ECONOMIC GROWTH IN THE UNITED STATES

ECONOMIC GROWTH IN THE UNITED STATES

Economic Growth
in the
United States
Economic growth can be defined as increases in per capita real GDP (gross domestic
product) measured by its rate of change per year. Growth rates are very important because
even a small change can make vast difference in the coming years. The knowledge of
economic growth is also important because it can provide the means to allow us to gain
valuable insights. According to Robert D. McTeer, president and chief executive officer
of the Federal Reserve Bank of Dallas, two factors determine the rate of economic growth:
productivity increases (more output for the same amount of inputs), and labor (the number
of hours worked).
Productivity in the United States, due to new innovations (that are coming together after
years of investment), is growing to levels not seen since the 1960's. For example:
productivity growth has averaged 2.3 percent from 1996 to 1999, doubling the 1.1 percent
average productivity growth from 1973 to 1995. At a rate of two percent from 1996 to
1999, labor has also increased, as unemployment fell and welfare recipients have gone to
work. The economy has been growing at a rate of about 4.5 percent each year, due to
this.
However, the increase in the workforce , or hours worked, limits labor growth. Again,
according to McTeer, in the long run, productivity growth is the key to rising living
standards. 
On another note, there are many benefits that go along with the economic expansion we are
experiencing. The current economic expansion has commonly been referred to by economists
as The 1990's Economic Boom, because the current growth of the U.S. economy is the
longest ever in peacetime. Economists observe that this expansion has benefited nearly
every American. According to the reports of the Bureau of Labor Statistics, more than
three out of every four jobs created from 1989 to 1995 were highly-paid professionals and
managerial positions. The Council of Economic Advisers reported that in 1995 and 1996,
more than half of new jobs created were in fields where the average wage ranked in the
top third of all salaries. Another great benefit according to the Investor's Business
Daily January 19, 1999 publication, is that 1.67 million families left welfare rolls, and
1.74 million more single parents found jobs. 
Though this economic expansion has been the longest since World War II (according to the
New York Times, October 18, 1998), growth during the 1990's has been weaker than during
any growth cycle since the end of the war. For example, for most United States
households, inflation-adjusted income is no higher today than it was in 1989 when the
last expansion ended; layoffs are running ahead of 1980's levels, though the job market
is strong; and though business has invested heavily in the 1990's, it has not as much as
in earlier expansions.
In conclusion, both productivity gains and economic growth have been languid compared
with performance in past expansions.
Bibliography
Works Cited
Bray Duff, Anna. The '90s Boom: Broad and Deep. Investor's Business Daily. 19 January
1999.
--. Is This Economy That Special? Investor's Business Daily. 9 June 1998.
Miller, Roger LeRoy. Economics Today: The Macro View. USA, 1998.