The State of the U.S. Economy

One of the key issues in the upcoming election is the state of the economy of the United States. How healthy is it? It depends on who you ask.

The key measure of an economy is the Gross Domestic Product (GDP) - the market value of all final goods and services from a nation in a year. The United States has the largest economy in the world - by far! Our Gross Domestic Product (GDP) is $27.36 trillion. China, in second place, is $17.8 trillion. Total world GDP is $110 trillion. For several years we have produced anywhere from 25-30% of the world's total.

I recently attended an Economic Forum at the Gering Convention Center, put on by the Federal Reserve System. The Federal Reserve is the central bank of the United States. Their task is to promote the health and stability of the U.S. economy and our banking system. They watch several indicators, but the most important are GDP, inflation, and unemployment.

The Federal Reserve System is made up of a Board of Governors in Washington, D.C. and twelve regional Federal Reserve Banks. We are in the Tenth Federal Reserve District, which includes Nebraska, Colorado, Wyoming, Kansas, Oklahoma, Missouri, and northern New Mexico.

We heard from Jeff Schmid, President of the Tenth District, headquartered in Kansas City. Schmid reminded us that most of our economic news is good news. The U.S. is the world's largest producer of petroleum and natural gas. The U.S. is the world's largest consumer of goods and services. We are the second largest manufacturing nation in the world, producing one-fifth of the global total.

We are still feeling the effects of the COVID pandemic of 2000, which shut down much of our nation's economy. Supply of goods and services was disrupted, with many business closures and unreliable transportation. Demand for some goods went way up, but for others was virtually nonexistent. Millions were laid off from jobs.

Those issues have stabilized. Our economic growth has been much stronger than expected. In fact, Schmid says that our GDP is higher than it would have been had the pandemic not occurred! Our production of both goods and services and our commodity prices have risen due to global demand.

Unemployment rates are at historic lows. Wages have risen more than the rate of inflation through most of the U.S., so most Americans are better off!

Inflation is the issue that most divides economists. Our goal is to have an inflation rate of 2%, and right now we are close to that, at 3%. However, after the pandemic, prices surged 7-9% every year. And those prices will never drop to what they were before the pandemic. We have seen the biggest increases in the items we buy regularly, groceries and gas. Those prices remain high, but continue to fluctuate with supply and demand.

Nate Kauffman, head of the Federal Reserve Branch Bank in Omaha, is the Fed's principal expert in agricultural economics. He indicated that our ag-based economy has been doing very well for several years. This year we are not seeing the same growth that we have, and that lag will continue next year.

Both men talked about how the Fed bases decisions on the macroeconomy, the entire economy of the U.S. But they recognize that there are regional differences. Some parts of the nation see a stronger recovery than others. They also talked about socio-economic differences. Young adults, for example, may not be faring as well as older Americans.

There is uncertainty in our nation's economy. But it is much stronger than the news media would have us think!