The US Economy at a Glance
Frequently Asked Questions
What type of economy does the U.S. have?
The U.S. economy is a mixed economy. The U.S. economic system is one in which some goods and services are privately owned and exchanged in a free market, while others are managed by the government.
How large is the U.S. economy?
The U.S. economy is one of the largest in the world. It contributes trillions of dollars to the world’s gross domestic product (GDP) every year and is a leader in global trade. Because of this, the U.S. dollar is the most widely used currency in financial markets and is the world’s reserve currency.
How does a strong dollar impact the U.S. economy?
A strong U.S. dollar makes U.S. exports of goods and services more expensive in other countries. On the other hand, a strong U.S. dollar also makes foreign goods and services relatively cheaper to those in the U.S. This means that exports may decrease while imports may increase.
How is the federal funds rate set?
The federal funds rate is the interest rate that banks and depository institutions charge each other for overnight loans. It is calculated as a volume-weighted average of overnight federal funds transactions. The Federal Reserve sets a target range for the fed funds rate at its Federal Open Market Committee (FOMC) meetings, which means it can change throughout the year.
Federal Reserve Discount Rate
The Federal Reserve discount rate is the interest rate that the U.S. central bank charges member banks to borrow from its discount window. Banks are allowed to borrow to maintain the cash they are required to hold for customer withdrawals.
The Federal Reserve is the central bank of the U.S. The Fed supervises the nation's largest banks, conducts monetary policy, and provides financial services to the U.S. government. It also promotes the stability of the financial system.
Fannie Mae is a quasi-governmental agency that makes buying or renting a home more affordable, while also reducing the risks for lenders. It plays a crucial role in maintaining the 30-year fixed-rate mortgage, the most popular home loan option on the market.
Bureau of Labor Statistics (BLS)
The Bureau of Labor Statistics (BLS) is the premier research arm of the Department of Labor. It collects, analyzes, and reports on a wide range of employment, unemployment, and price statistics. These reports are critical aids to taking the pulse of the U.S. economy.
Freddie Mac is a government-owned corporation that buys mortgages and packages them into mortgage-backed securities. Its official title is the Federal Home Loan Mortgage Corporation or “FHLMC.”
The federal budget is the government's estimate of revenue and spending for each fiscal year. Like a family budget, the federal budget itemizes the expenditure of public funds for the upcoming fiscal year. The federal government's fiscal year begins each October.
Federal Open Market Committee
The Federal Open Market Committee (FOMC) conducts monetary policy for the U.S. central bank. As an arm of the Federal Reserve System, its goal is to promote maximum employment, stable prices, and moderate interest rates over time.
Congressional Budget Office (CBO)
The Congressional Budget Office (CBO) is a bipartisan federal agency that analyzes the economy for the U.S. Congress. It also assists the House and Senate Budget Committees. It reviews the president's annual budget. It also reports on the deficit impact of every important piece of legislation.
Consumer Confidence Index
The Consumer Confidence Index is a measurement of Americans’ attitudes about current and future economic conditions. It tells you how optimistic people are about the economy and their ability to find jobs.
Dodd-Frank Wall Street Reform Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act is a law that regulates the financial markets and protects consumers. Its components are designed to prevent a repeat of the 2008 financial crisis.