The U.S. Economy Today

Even in crisis, the American economy remains the world’s largest and most diverse. The total output of U.S. goods and services—the gross domestic product—stood at $14 trillion in 2007, nearly three times the size of Japan’s economy and five times China’s, based on the purchasing power of each country’s currency. With just 5 percent of the world’s population, the United States is responsible for 20 percent of total economic output.

The U.S. gross domestic product per person was nearly $45,000 in 2007, compared to a worldwide average of $11,000. The economy poured out $40 billion a day in goods and services that year, drawing its fuel from the know-how of the 150 million Americans who make up the workforce. Capital provided more fuel: the $5.5 billion in nongovernmental funds that Americans invested daily in their businesses and homes. And there are the nation’s resources of minerals, energy, water, forests, and farmland.

The productivity of American working men and women remains a standard for the world. The average American worker produced more than $92,000 worth of products and services in 2007. This is nearly 20 percent more than that of the average of a dozen leading European countries and 85 percent higher than that of China, according to the U.S. Conference Board. U.S. productivity expanded by an average 2 percent a year from 2000 through 2006, twice the gain in most of Europe. In one study of 16 major industrial nations, only South Korea, Sweden, and Taiwan had higher productivity growth than the United States over the same years. These increases in productivity have helped the United States maintain relatively low unemployment and inflation.

The World Economic Forum, whose annual conferences are a gathering of top international government and corporate leaders, has regularly ranked the United States as the world’s most competitive economy. Major U.S. companies have stayed atop international markets through a determined focus on innovation, cost reduction, and the return of profits to shareholders. Of the 2007 Fortune magazine list of the 500 largest corporations worldwide, 162 were headquartered in the United States.

American technology leadership continues to expand from current foundations in computers, software, multimedia, advanced materials, health science, and biotechnology into the frontiers of nanotechnology and genetics. Although the euro is gaining support as a currency of choice, the American dollar remains the centerpiece of international commerce.

When Barack Obama took office as president in January 2009, the immediate crisis dominated his agenda, and beyond that lay grave, longer-range challenges. Record federal budget deficits stemming from the government lending in the crisis could challenge the stability of the U.S. dollar. The federal government’s rising retirement and health care commitments to an aging population will test the government’s ability to pay for itself. American businesses, shareholders, and consumers could face heavy costs in adapting processes and products to conserve natural resources and meet the challenges of climate change. Disparities in educational attainment could increase. Foreign competition and technological change could displace more U.S. jobs.

America’s continued political support for a free flow of trade and finance and its openness to the world hinge critically on a continued prosperity for the large majority of its citizens.

President Obama acknowledged the severity of the challenge in a speech shortly before his inauguration. But he also reminded the nation of its heritage and of its inherent strengths. “We should never forget that our workers are still more productive than any on Earth. Our universities are still the envy of the world. We are still home to the most brilliant minds, the most creative entrepreneurs, and the most advanced technology and innovation that history has ever known. And we are still the nation that has overcome great fears and improbable odds.”

VOCABULARY

1. to earn one’s living - зарабатывать на жизнь

2. commerce - торговля

3. to undertake - предпринимать

4. essential commodity – товар первой необходимости

5. utility – утилитарность

6. consumer – потребитель

7. to vary – изменять (ся), разниться

8. to be related to smth – относиться к чему-либо

9. excess – излишек

10. available – доступный, в наличии

11. demand for smth - спрос на что-либо

12. to increase – возрастать, увеличиваться

13. to decrease – уменьшаться

14. successive – последующий

15. purchase – покупка

16. marginal utility - предельная польза

17. to diminish – ослаблять, убавляться

18. perishable goods – скоропортящиеся продукты

19. to deteriorate – ухудшаться, портиться

20. quantity – количество

21. to tend to – иметь тенденцию к чему-либо

22. to result in – увенчаться чем-либо

23. to go out of business – обанкротиться

24. a glut on the market – перенасыщение, затоваривание рынка

25. to adjust to – приспосабливаться

26. scale of preferences – шкала предпочтений

27. luxury – роскошь, предмет роскоши

28. to be regarded as – определяться как, рассматриваться как

29. to rise steeply – резко возрасти

30. in response to – в ответ на

31. scarcity –недостаток, нехватка

32. an infinite number of – бесконечное число чего-либо

33. to allocate resources – распределять ресурсы

34. output – продукция, выпуск изделий

35. to solve a problem – решать проблему

36. a tribe – племя, клан

37. to assume – допускать, предполагать

38. the framework of – структура чего-либо

39. to alter decisions – изменить решение

40. an attempt – попытка

41. inputs – затраты на производство

42. variable – переменная (величина)

EXERCISES

Exercise 1. You have now used the three words economics, economic and economist. There are also in this set the words economical, economically and economy. Each word has a different use. Try to put the right word in the blanks in these sentences:

1. Marx and Keynes are two famous ______s.

2. Those people are studying the science of _______.

3. We sometimes call a person’s work his _______ activity.

4. People should be very _______ with money they earn.

5. The economic system of a country is usually called the national _______.

6. The people in that town live very _______.

Exercise 2. Study the example and then do the same for the listed words.

EXAMPLE Britain: That man is British; he is a Briton.

Holland: That man is Dutch; he is a Dutchman.

India: That man is Indian; he is an Indian.

Do the same for the following (make sure that you know the capitals of the countries):

Germany	France	Mexico
Italy	Malaysia	Norway
Spain	China	Pakistan
Greece	Japan	Indonesia
Brazil	Scotland	Iran
Sweden	Canada	Turkey
Portugal	Egypt	Ghana
England	Ireland	Zambia
U.S.A

Exercise 3. Make these adjectives negative by adding the prefix un -

EXAMPLE stableÞ un + stableÞunstable

economic	economical	satisfactory
systematic	necessary	scientific
enjoyable	available	suitable
equal	productive	conditional
important	usual	desirable

Use the appropriate adjectives in their negative forms in these sentences.

1. People do not like working in _______ conditions.

2. The employers decided to close that factory because it was _______.

3. Complete economic freedom is an _______ situation.

4. Compared with our need for food, clothes and shelter, some of our wants are quite _______.

5. We say that goods are sold at _______ prices, when the price is less than the cost of producing them.

6. The goods which he wanted were _______ at the price which he was willing to pay.

Exercise 4. Give the corresponding nouns to the following words:

EXAMPLE economy – economic

ideology – ideological

organic	mobile	commercial
commune	productive	active
rapid	complex	necessary
equal	secure	liquid
solid	regular	similar

Put each word in its suitable place in the sentences.

1. The system was complex. Its _______surprised him.

2. The movements of the products in the factory were rapid. The _______ of the work surprised him.

3. People who have cars are very mobile. This _______ is a useful thing.

4. The National Bank has a solid reputation. Its _______ in money is similar to the _______ of its buildings.

5. The national economy, like a man, should be active. Its _______ is a sign of its health.

6. Your money is secure in the National Bank. Its _______ is important both to you and to the bankers.

7. The workers in those factories are very productive. Their _______ is very useful to the national economy.

8. Those men arrive regularly at nine o’clock. Their _______ is well known.

9. The American and British economic systems are very similar. This _______ is not surprising.

10.Those two men earn equal sums of money. They have _______ in wages because they produce the same quantity and quality of goods.

11.The exchange of money should be as liquid as possible. The _______ of money helps the economy to grow.

Exercise 5. Below are two lists. Pair off each words in the first list with its opposite in the second list.

theoretical	local
private	maximum
individual	selling
mineral	complex
capitalistic	communistic
simple	organic
buying	collective
minimum	public
national	practical

Exercise 6. What do the following abbreviations stand for:

EXAMPLE The USA Þ The United States of America

BP	OAU	UK
NATO	EEC	ASEAN
UNO	WHO	ILO
IMF	FAO	BEA
GATT

Exercise 7. Translate.

1. Скоропортящиеся продукты рекомендуется хранить в холодильнике.

2. В ответ на повышение цен на товары первой необходимости была повышена средняя заработная плата.

3. Правительство предприняло решительные меры против перенасыщения рынка.

4. Сделав покупку в нашем магазине, каждый покупатель получает подарок.

5. Спрос на изделия из меха имеет тенденцию снижаться в теплое время года.

6. Спешите, количество товаров ограничено!

7. Он много лет зарабатывает себе на жизнь ловлей рыбы.

8. Излишки строительных материалов было решено продать частным лицам.

9. Шкала потребительских предпочтений варьируется от одной социальной группы к другой.

10. Согласно прогнозу погоды погода на следующей неделе ухудшится.

2 the challenges of this century

The world’s largest and most diverse economy currently faces the most severe economic challenges in a generation or more.

The financial crash of 2008 brought a sudden, traumatic halt to a quarter-century of U.S.-led global economic growth. The consequences of this shock for the U.S. and world economies are far-reaching.

Since the election of Ronald Reagan as president in 1980, the United States had championed globalization of trade and finance. It opened its doors wider to foreign products and investment than any other major economy. America’s entrepreneurial culture was the world’s model.

But America’s growth came to rely increasingly on debt. Consumers, businesses, home buyers, and the U.S. government itself borrowed heavily in the belief that the value of their investments—including their homes—would continue to grow. The ready availability of credit on easy terms drove home prices, in particular, ever higher.

When the housing boom finally collapsed in 2007, it exposed a fragile layer of high-risk home loans made over a decade to families that could not afford them, particularly if the economy weakened. Some borrowers had purchased homes they could not afford, trusting that in a rising market they could always sell their properties at a profit. As housing prices fell, homeowners who no longer could keep up with their mortgage payments were unable to pay their debt by selling their homes. These home loans thus were the unstable foundation for a massive but largely invisible speculation on mortgage securities and financial contracts sold around the world.

Triggered by the housing collapse, foreclosures grew, and panic followed. Giant Wall Street financial firms fell, reorganized, or were combined with larger competitors. Stock markets plunged, and the world’s economies headed into the worst crisis since the Great Depression of the 1930s.

The catastrophe revealed weaknesses unheeded during the boom. U.S. consumption had for too long outpaced savings. Lessons from past booms and crashes were ignored as many focused only on the present. Financial regulators’ faith in the efficiency of economic markets led them to underestimate the risks.

But the crisis also revealed the ability of the American government to respond quickly and decisively to the challenge. Washington officials responded with unprecedented measures to head off a global collapse of lending. The federal government and the Federal Reserve central bank seized control of the two largest U.S. home mortgage firms and bailed out leading banks and a major insurance company, actions that would have been politically unthinkable before the crisis.

Since the start of the global crisis in 2008, U.S. government agencies and the central bank had pledged an astonishing $12.8 trillion—equal to nearly the entire U.S. annual economic output—in loans, loan purchases, and credit guarantees seeking to halt the financial freefall.

VOCABULARY

1. to meet human needs – удовлетворять потребности человека

2. distribution of goods and services – распределение товаров и услуг

3 BASIC INGREDIENTS OF THE U.S. ECONOMY

Every economic system tries to anticipate and then meet human needs through the production and distribution of goods and services. The economic system is the mechanism that brings together natural resources, the labor supply, technology, and the necessary entrepreneurial and managerial talents. Although the type of economic system used by a nation is the result of political decision, it is also in even larger part the result of a historical experience that, over time, becomes a national culture.

The first ingredient of an economic system is the natural resources from which goods are produced. The United States is a land rich in mineral resources and fertile farm soil, together with a moderate climate.

Second, the amount of available labor helps determine the health of an economy. Generally, the United States has been fortunate in having enough people to provide the labor necessary for a constantly expanding economy. Until shortly after World War 1, most of these workers were either immigrants (or their immediate descendants) who came to America from Europe, or African Americans whose forebears were brought to the Americas as slaves.

In the early years of the 20th century, large numbers of Asian (Chinese, Japanese, Filipino) immigrants came to the United States, while large numbers of Latin American immigrants came in the later years. Economic opportunity also attracted black Americans from Southern farms to Northern cities in the first half of the 20th century.

Although the United States has sometimes experienced periods of acute unemployment or the reverse, labor shortage, on the whole, immigrants came when work was plentiful. The U. S. economy usually grew fast enough to absorb the newcomers, provided they were willing to work productively at slightly less than the wage rates paid to acculturated workers. Overall, immigrants prospered, earning far more than they would have in their native lands, and the economy of the nation prospered as well.

Another factor in any economic system is the quality of available labor—how hard people are willing to work and how skilled they are. The strong emphasis placed on education, including technical and vocational education, also contributed to America's economic success.

But the existence of abundant natural resources and a skillful and willing labor force accounts for only part of the structure of an economic system. The resources must be directed as efficiently as possible into the areas where they will be most productive. In the American economy, managers of enterprises perform this function.

Large blocks of resources must be available for major investments. In America, entrepreneurs accumulate money and then invest in projects - buy supplies, hire workers and sell products - that seem likely to give a high return on the original investment.

In the United States, the corporation has proved to be an effective device for accumulating funds for investment. This is a voluntary association of owners, known as stockholders, who form a business enterprise that is marked by limited liability.

Once the first entrepreneurial investment of capital has been made, someone must be hired to manage the new business, factory or other endeavor. Modern America has developed a chain of managerial command, from the foreman at the loading dock to the chief executive in the boardroom, whose job is to see that the business runs smoothly and efficiently. Good management often can make the difference between a successful or unsuccessful operation.

VOCABULARY

3. to meet human needs – удовлетворять потребности человека

4. distribution of goods and services – распределение товаров и услуг

5. abundant natural resources – богатые природные ресурсы

6. labor supply – обеспеченность рабочей силой

7. to be rich in – быть богатым чем-либо

8. fertile farm soil – плодородные фермерские земли

9. to expand – увеличиваться, расти, расширяться

10. descendants - потомки

11. forebears – предки

12. to be absorbed in smth/doing smth - быть вовлеченным во что-либо

13. unemployment – безработица

14. labor shortage – нехватка рабочей силы

15. wage rate – уровень заработной платы

16. to prosper – процветать, преуспевать

17. quality - качество

18. skilled workers – квалифицированные рабочие

19. to place emphasis on smth – делать упор на что-либо

20. to contribute to smth – вносить вклад во что-либо

21. to invest in smth – инвестировать

22. vocational education – профессиональное образование

23. significant – значимый, важный

24. to account for – объяснять что-либо, отвечать за что-либо

25. to accumulate money – накапливать денежные средства

26. supplies – запасы, продовольствие

27. entrepreneur – предприниматель

28. to hire workers – нанимать рабочих

29. to give a high return on – давать высокую отдачу, приносить прибыль

30. consumer demand – потребительский спрос

31. to manage/run a business – управлять фирмой, компанией

32. chief executive – генеральный директор

33. to be based on smth – основываться на чем-либо

EXERCISES

Exercise 1. Change the listed adjectives into adverbs (-ly or –ally are necessary) and put one adverb in each sentence in order to make sense. Some adverbs can operate successfully in more than one sentence.

EXAMPLE great ðgreatly

Their private property was _______ reduced.

Their private property was greatly reduced.

careful	Scientific	considerable
rapid	systematic	regular
clear	Probable	usual
complete

1. The new government worked _______ to change the laws.

2. The central authority _______ controls the quality and quantity of goods.

3. The State _______ plans the economic effort of its citizens.

4. The economic system changed _______ over the thirty year period.

5. Work in economics should always be done _______.

6. Their economic system is _______ capitalistic.

7. The employers will _______ discuss the use of new machines in the factory.

8. The city has changed _______ in the last few years.

9. These men work _______ from nine o’clock till five every day.

10.In a free economy there is _______ very little central planning.

Exercise 2. Make compound words by altering these sentences.

EXAMPLE He is not interested in bearing risks.

He is not interested in risk-bearing.

1. He is not interested in owning a house.

2. He is interested in making profits.

3. The company has decided on a policy of sharing profits.

4. The business of raising capital is sometimes difficult.

5. The problem of making good policies is part of politics.

Exercise 3. Change these sentences by changing certain adjectives into verbs. The new verbs are listed, but not in the proper order. Note that all these verbs are concerned with making something happen, or causing something to happen.

EXAMPLE They made the economy regular.

ðThey regulated the economy.

complicate	consolidate	liquidate
simplify	nationalize	internationalize
activate	re-activate

1. They made the subject complex.

2. They made the subject simple.

3. They made the business ‘solid’ (by bringing them together).

4. They made the business ‘liquid’ (by breaking it up or ‘dissolving’ it).

5. They made the economy active.

6. They made the economy active again (or for a second time).

7. They made the industry national (or public).

8. They made the business international.

Exercise 4. Arrange the following sentences in their proper order, to produce a paragraph about the National Economic Development Council.

1. It meets regularly, under the chairmanship of the Prime Minister.

2. Each committee is concerned with an individual industry and is composed of members from management, the trade unions, government committees and three independent members.

3. The NEDC, which was set up in 1962, brings together representatives of government, management and the trade unions, and provides a meeting place for the discussion of future policy and planning.

4. The EDCs study measures to improve efficiency and competitive power in each industry.

5. Other members are the ministers of the main economic departments of the government, representatives of management and trade unions and the nationalized industries, independent members and other interested people.

6. The NEDC has set up twenty-one Economic Development Committees.

Exercise 5. Make these words negative by adding the prefix in -

EXAMPLE stabilityÞ in + stabilityÞinstability

active	activity	organic
secure	security	sufficient
definite	frequent	adequate
distinct	complete	solvent
expert	conclusive	dependent

Use the appropriate words in their negative forms in these sentences.

1. Metals are _______substances.

2. Most nations like to be economically ______.

3. The services which they provided were quite _______.

4. If an economy becomes unstable, people begin to feel _______.

5. The men were rather _______ at the kind of work which they had been asked to do.