Economy

The economy concerns the making, buying, and selling of goods and services. The United States has the largest economic system in the world. Get the facts on the topic to understand how the economy is changing.

Data Updated December 12, 2022
Table of Contents

What are the basic facts?

There are many ways to measure the American economy: analyzing US gross domestic product (GDP) over time, recent jobs and employment reports, investments in small businesses, wealth distribution, price inflation, and more. This page provides some of these measures to answer fundamental economic questions and shows how data helps develop an understanding of how the economy is changing.

What is the role of the government in the economy?

Government spending

In fiscal year 2020, governments spent a combined total of $702.4 billion on the economy.

That’s $2,119 per person.

USAFacts categorizes government budget data to allocate spending appropriately, and to arrive at the estimate presented here. The economic spending shown includes support of general commerce, community and regional development, technology infrastructure, and the financial sector. Government spending on the economy tends to increase in times of economic uncertainty. Recent increases in spending went toward supporting the financial sector in 2009 during the Great Recession and small businesses in 2020 during the pandemic.

Government revenue and expenditures are based on data from the Office of Management and Budget, the Census Bureau, and the Bureau of Economic Analysis. Each is published annually, although due to collection times, state and local government data are not as current as federal data. Thus, when combining federal, state, and local revenues and expenditures, the most recent year for a combined number may be delayed.

Key government actors

Focus
Key actors
Responsibilities

Tax policy

Department of the Treasury, IRS, Congress

Set tax rates and collect taxes (largely income, payroll)

Monetary policy

Department of the Treasury

Sell Treasury securities

Trade policy

Congress, Office of US Trade Representative, Department of State, Department of Commerce

Negotiate trade agreements

Business support and community development

Various federal agencies depending on industry (e.g., Department of Agriculture for farm subsidies), Small Business Administration, and Department of Housing and Urban Development

Support businesses through direct subsidies and/or loans

Research and development

National Science Foundation, NASA

Fund and directly conduct basic science research

Operation of commercial business

Postal Service

Operate public mail system

Focus

Tax policy

Monetary policy

Trade policy

Business support and community development

Research and development

Operation of commercial business

Is the economy growing?

Economic growth

In Q2 2022, real gross domestic product growth was -0.6%.

The US economy contracted at the start of 2022 after a period of recovery following the pandemic.

Gross domestic product (GDP) is used to estimate the size of the US economy. It is calculated as the total value of all goods and services produced in the US. It includes the total dollar amount of consumption (products like cellphones and bread), government spending (on things like infrastructure and the military), business investment (a manufacturer building a new factory), and the net effect of trade (subtracting imports from exports). The Bureau of Economic Analysis is the agency responsible for calculating GDP.

Most economists are interested in the rate of growth. Growth in the inflation-adjusted GDP ( or "real GDP") tends to signal a positive economic outlook, while slowing growth may mean a recession is coming.

Although the nation’s economy may be growing or shrinking on average, this growth is not uniform by location.

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Is the cost of living rising?

Inflation rate

In December 2022, prices were 6.4% higher compared to the same month last year.

Growth in the consumer price index (price inflation) has trended upward throughout 2022.

There are many ways of measuring inflation, but one of the most common measures is the Consumer Price Index for Urban Consumers (CPI-U), which is produced by the Bureau of Labor Statistics. The CPI-U is an index-value of the price paid by urban consumers for a “representative basket of goods and services” or the most common goods and services Americans buy in an average month. The agency surveys 24,000 people every three months about their spending habits, classifying spending in more than 200 categories.

Price inflation is the percent increase in this index, year-over-year. (If the percentage is negative, it is called price deflation) In other words, it shows how much prices have changed compared to the same month last year, as a percentage.

Although prices may be growing or shrinking on average, changes may not be uniform when breaking it down by spending categories. This means that everybody experiences inflation differently. Since food and energy categories are typically much more volatile than the other parts of the CPI, economists often focus more on a metric called the “core” CPI which excludes these two categories. However, every household or personal budget is different.

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Are Americans working?

Unemployment rate

In December 2022, the unemployment rate was 3.5%.

The unemployment rate has dropped throughout 2022 after recovering from the economic fallout of the pandemic.

Published by the Bureau of Labor Statistics (BLS), the official unemployment rate is the number of active job seekers divided by the labor force. The BLS defines active job seekers as people who are not working and have submitted a job application at least once in the past four weeks. Anyone who has a job at the time of the survey, even if it is part-time, seasonal, or temporary, is considered employed and is not included in the unemployment rate.

Although the unemployment rate is often reported at the national level, it is not uniform when breaking it down by location. State unemployment rates are usually published two weeks after the national unemployment rate is announced.

Unemployment rate by race and ethnicity

In December 2022, the unemployment rate for Black Americans was 5.7%.

In addition to geographic differences, unemployment can vary across race and other demographics: everybody experiences the economy differently. Only racial and ethnic groups with seasonally adjusted monthly data available are shown here.

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