North America

United States of America

The United States has the largest and most technologically powerful economy in the world, with a per capita GDP of $47,400. In this market-oriented system, private individuals and businesses make most decisions, while federal and state governments procure goods and services primarily from the private sector.

U.S. firms enjoy greater flexibility than their counterparts in Western Europe and Japan in terms of:

• Capital expansion
• Labor force adjustments
• New product development

However, U.S. businesses often face higher entry barriers into foreign markets than international competitors face when entering U.S. markets.

American companies remain at the forefront of technological innovation — especially in:

• Computing
• Medical equipment
• Aerospace
• Military technologies

Still, this edge has narrowed since World War II. The rapid evolution of technology has contributed to a growing “two-tier” labor market, where those with education and technical skills see wage growth and benefits, while lower-skilled workers fall behind.

Since 1975, nearly all household income gains have gone to the top 20% of earners.

Economic Challenges and Recovery

The Iraq War in 2003, rising oil prices (2005–2008), and a high reliance on imported oil (about 60% of total U.S. consumption) intensified inflationary pressures and increased unemployment.

Long-term structural challenges include:

• Underinvestment in infrastructure
• Rising healthcare and pension costs for an aging population
• Large trade and budget deficits
• Stagnant lower-tier family income

The merchandise trade deficit reached a record $840 billion in 2008, fell to $506 billion in 2009, and rebounded to $630 billion in 2010.

The 2008 Financial Crisis

The global economic downturn, mortgage collapse, and credit tightening pushed the U.S. into a recession by mid-2008 — the worst since the Great Depression. GDP shrank until Q3 of 2009.

In response, Congress launched the $700 billion Troubled Asset Relief Program (TARP) in October 2008, allowing the government to purchase equity in struggling banks and corporations. Most of these investments were repaid by early 2011.

Obama-Era Economic Policies

• January 2009: Congress passed a $787 billion stimulus package — two-thirds in spending, one-third in tax cuts — to revive job growth and support recovery. By the end of 2010, two-thirds of the funds had entered the economy.
• March 2010: The Affordable Care Act was signed, aiming to extend health insurance coverage to 32 million Americans by 2016 through private and Medicaid-based programs.
• July 2010: The Dodd-Frank Wall Street Reform Act was signed to stabilize the financial system by:
  • Ending taxpayer bailouts of major firms
  • Regulating financial derivatives
  • Increasing market transparency and consumer protections
• November 2010: The Federal Reserve announced a $600 billion bond-buying program (quantitative easing) to keep interest rates low and fuel economic growth.

News

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Canada

As an affluent, high-tech industrial society in the trillion-dollar class, Canada resembles the United States in its:

• Market-oriented economy
• Pattern of production
• Affluent living standards

Since World War II, strong growth in manufacturing, mining, and service sectors has transformed Canada from a primarily rural economy into one that is urban and industrialized.

The 1989 US–Canada Free Trade Agreement (FTA) and the 1994 North American Free Trade Agreement (NAFTA) with Mexico catalyzed a significant rise in trade and economic integration with the U.S., Canada’s principal trading partner.

Canada enjoys a substantial trade surplus with the U.S., which accounts for approximately 75% of Canadian exports annually. It is also the U.S.’s largest foreign supplier of:

• Oil
• Natural gas
• Uranium
• Electric power

Thanks to its abundant natural resources, skilled workforce, and advanced capital infrastructure, Canada experienced strong economic growth from 1993 through 2007.

However, in late 2008, the global economic crisis pushed Canada into recession, and the federal government recorded its first fiscal deficit in 2009 after 12 consecutive years of surplus.

Despite this downturn, Canada’s major banks emerged among the world’s most stable and well-capitalized, due to prudent lending practices and conservative financial regulation.

In 2010, Canada’s economy grew by only 3%, hindered by reduced global demand and a strong Canadian dollar.

News

Updates coming soon.