U.S. Economy

A1 Agriculture

The United States contains some of the best cropland in the world.

Cultivated farmland constitutes 19 percent of the land area of the

country and makes the United States the world’s richest agricultural

nation. In part because of the nation’s favorable climate, soil, and

water conditions, farmers produce huge quantities of agricultural

commodities and a variety of crops and livestock.

The United States is the largest producer of corn, soybeans, and sorghum,

and it ranks second in the production of wheat, oats, citrus fruits, and

tobacco. The United States is also a major producer of sugar cane,

potatoes, peanuts, and beet sugar. It ranks fourth in the world in cattle

production and second in hogs. The total annual value of farm output

increased from $55 billion in 1970 to $202 billion in 1996. Farmers in

the United States not only produce enough food to feed the nation’s

population, they also export more farm products than any other nation.

Despite this vast output, the U.S. economy is so large and diversified

that agriculture accounted for only 2 percent of annual GDP and employed

only 3 percent of the workforce in 1998.

During the 20th century, many Americans moved from rural to urban areas

of the United States, resulting in large population decreases in farming

regions. Even though the number of farms has been declining since the

1930s, overall production has increased because of more efficient

operations. Bigger farms, operated as large businesses, have increasingly

replaced small family farms. The owners of larger farms make greater use

of modern machinery and other equipment. By the 1990s, farm operations

were highly mechanized. By applying mechanization, technology, efficient

business practices, and scientific advances in agricultural methods,

larger farms produce great quantities of agricultural output using small

amounts of labor and land.

In 1999 there were 2,194,070 farms in the United States, down from a high

of 6.8 million in 1935. As smaller farms have been consolidated into

larger units, the average farm size in the United States increased from

about 63 hectares (about 155 acres) to 175 hectares (432 acres) by 1999.

Cattle production is widespread throughout the United States. Texas leads

in the production of range cattle, which are allowed to graze freely.

Iowa and Illinois are important for nonrange feeder cattle, which are

cattle that eat feed grain provided by cattle farmers. The Dairy Belt

continues to be concentrated in southern Wisconsin but is also prominent

in the rural landscapes of most northeastern states and fairly common in

other states, too. Hog production tends to be concentrated in Iowa,

Illinois, and surrounding states, where hogs are fattened for market.

Chicken production is widespread, but southern states, including Texas,

Arkansas, and Alabama, dominate.

Corn and soybean production is concentrated heavily in Iowa and Illinois

and is also important in surrounding states, including Missouri, Indiana,

Nebraska, and the southern regions of Minnesota and Wisconsin. Wheat is

another important U.S. crop. Kansas usually leads all states in yearly

wheat production. North Dakota, Montana, Oklahoma, Washington, Idaho,

South Dakota, Colorado, Texas, Minnesota, and Nebraska also are major

wheat producers.

For more than a century and a half, cotton was the predominant cash crop

in the South. Today, however, it is no longer important in some of the

traditional cotton-growing areas east of the Mississippi River. While

some cotton is still produced in the Old South, it has become more

important in the Mississippi Valley, the Panhandle of Texas, and the

Central Valley of California. Cotton is shipped to mills in the eastern

United States and is exported to cotton textile plants in Japan, South

Korea, Indonesia, and Taiwan.

Vegetables are grown widely in the United States. Outside major U.S.

cities, small farms and gardens, known as truck farms, grow vegetables

and some varieties of fruits for urban markets. California is the leading

vegetable producing state; much of its cropland is irrigated.

Most fruits grown in the United States fall in the categories of

midlatitude and citrus fruits. Midlatitude fruits, such as apples, pears,

and plums, grow in northern states including Washington, Michigan,

Pennsylvania, and New York. Citrus fruits—lemons, oranges, and

grapefruits—thrive in Florida, southern Texas, and southern California.

Nuts grow on irrigated land in the Central Valley of California and in

parts of southern California.

Production of specialty crops and livestock has increased in recent

years, particularly along the East and West coasts and in the Southeast.

Ranches in New York and Texas have introduced exotic game, such as emu,

fallow deer, and nilgai and black buck antelope. Deer and antelope meat,

known as venison, is served mainly in restaurants. Specialty vegetable

and fruit operations produce dwarf apples, brown and green cotton,

canola, and jasmine rice. Farmers raise more than 60 specialty crops in

the United States for Asian-American markets, including bean sprouts,

snow peas, and Chinese cabbage.

A2 Forestry

In the 1990s, less than 1 percent of the country’s workforce was involved

in the lumber industry, and forestry accounted for less than 0.5 percent

of the nation’s gross domestic product (GDP). Nevertheless, forests

represent a crucial resource for U.S. industry. Forest resources are used

in producing housing, fuel, foodstuffs, and manufactured goods. The

United States leads the world in lumber production and is second in the

production of wood for pulp and paper manufacture. These high production

levels, however, do not satisfy all of the U.S. demand for forest

products. The United States is the world’s largest importer of lumber,

most of which comes from Canada.

When European settlers first arrived in North America, half of the land

on the continent was covered with forests. The forests of the eastern and

northern portions of the country were fairly continuous. Beginning with

the early colonists, the natural vegetation was altered drastically as

farmers cleared land for crops and pastures, and cut trees for firewood

and lumber. In the north and east, lumbermen quickly cut all of the

valuable trees before moving on to other locations. Only 10 percent of

the original virgin timber remains. Almost two thirds of the forests that

remain have been classified as commercial resources.

Forests still cover 23 percent of the United States. The trees in the

nation’s forests contain an estimated 7.1 billion cu m (249.3 billion cu

ft) of wood suitable for lumber. Private individuals and businesses,

including farmers, lumber companies, paper mills, and other wood-using

industries, own about 73 percent of the commercial forestland. Federal,

state, and local governments own the remaining 27 percent.

Softwoods (wood harvested from cone-bearing trees) make up about three-

fourths of forestry production and hardwoods (wood harvested from broad-

leafed trees) about one-fourth. Nearly half the timber output is used for

making lumber boards, and about one-third is converted to pulpwood, which

is subsequently used to manufacture paper. Most of the remaining output

goes into plywood and veneer. Douglas fir and southern yellow pine are

the primary softwoods used in making lumber, and oak is the most

important hardwood.

About half of the nation’s lumber and all of its fir plywood come from

the forests of the Pacific states, an area dominated by softwoods. In

addition to the Douglas fir forests in Washington and Oregon, this area

includes the famous California redwoods and the Sitka spruce along the

coast of Alaska. Forests in the mountain states of the West cover a

relatively small area, yet they account for more than 10 percent of the

nation’s lumber production. Ponderosa pine is the most important species

cut from the forests of this area.

Forests in the South supply about one-third of the lumber, nearly three-

fifths of the pulpwood, and almost all the turpentine, pitch, resin, and

wood tar produced in the United States. Longleaf, shortleaf, loblolly,

and slash pine are the most important commercial trees of the southern

coastal plain. Commercially valuable hardwood trees, such as gum, ash,

pecan, and oak, grow in the lowlands along the rivers of the South.

The Appalachian Highland and parts of the Great Lakes area have excellent

hardwood forests. Hickory, maple, oak, and other hardwoods removed from

these forests provide fine woods for the manufacture of furniture and

other products.

In the 1990s the forest products industry was undergoing a

transformation. New environmental requirements, designed to protect

wildlife habitat and water resources, were changing forest practices,

particularly in the West. The amount of timber cut on federal land

declined by 50 percent from 1989 to 1993.

A3 Fishing

The U.S. waters off the coast of North America provide a rich marine

harvest, which is about evenly split in commercial value between fish and

shellfish. Humans consume approximately 80 percent of the catch as food.

The remaining 20 percent goes into the manufacturing of products such as

fish oil, fertilizers, and animal food.

In 1997 the United States had a commercial fish catch of 5.4 million

metric tons. The value of the catch was an estimated $3.1 billion in

1998. In most years, the United States ranks fifth among the nations of

the world in weight of total catch, behind China, Peru, Chile, and Japan.

Marine species dominate U.S. commercial catches, with freshwater fish

representing only a small portion of the total catch. Shellfish account

for only one-sixth of the weight of the total catch but nearly one-half

of the value; finfish represent the remaining share of weight and value.

Alaskan pollock and menhaden, a species used in the manufacture of oil

and fertilizer, are the largest catches by tonnage. The most valuable

seafood harvests are crabs, salmon, and shrimp, each representing about

one-sixth of the total value. Other important species include lobsters,

clams, flounders, scallops, Pacific cod, and oysters.

Alaska leads all states in both volume and value of the catch; important

species caught off Alaska’s coast include pollock and salmon. Other

leading fishing states, ranked by value, are Louisiana, Massachusetts,

Texas, Maine, California, Florida, Washington, and Virginia. Important

species caught in the New England region include lobsters, scallops,

clams, oysters, and cod; in the Chesapeake Bay, crabs; and in the Gulf of

Mexico, menhaden and shrimp.

Much of the annual U.S. tonnage of commercial freshwater fish comes from

aquatic farms. The most important species raised on farms are catfish,

trout, salmon, oysters, and crawfish. The total annual output of private

catfish and trout farms in the mid-1990s was 235,800 metric tons, valued

at more than $380 million. In the 1970s catfish farming became important

in states along the lower Mississippi River. Mississippi leads all states

in the production of catfish on farms.

A4 Mining

As a country of continental proportions, the United States has within its

borders substantial mineral deposits. America leads the world in the

production of phosphate, an important ingredient in fertilizers, and

ranks second in gold, silver, copper, lead, natural gas, and coal.

Petroleum production is third in the world, after Russia and Saudi

Arabia.

Mining contributes 1.5 percent of annual GDP and employs 0.5 percent of

all U.S. workers. Although mining accounts for only a small share of the

nation’s economic output, it was historically essential to U.S.

industrial development and remains important today. Coal and iron ore are

the basis for the steel industry, which fabricates components for

manufactured items such as automobiles, appliances, machinery, and other

basic products. Petroleum is refined into gasoline, heating oil, and the

petrochemicals used to make plastics, paint, pharmaceuticals, and

synthetic fibers.

The nation’s three chief mineral products are fuels. In order of value,

they are natural gas, petroleum, and coal. In 1996 the United States

produced 23 percent of the world’s natural gas, 21 percent of its coal,

and 13 percent of its crude oil. From 1990 to 1995, as the inflation-

adjusted prices for these products declined, the extraction of these

fossil fuels declined, increasing U.S. dependence on foreign sources of

oil and natural gas.

The United States contains huge fields of natural gas and oil. These

fields are scattered across the country, with concentrations in the

midcontinent fields of Texas and Oklahoma, the Gulf Coast region of Texas

and Louisiana, and the North Slope of Alaska. Texas and Louisiana account

for almost 60 percent of the country’s natural gas production. Today, oil

and natural gas are pumped to the surface, then sent by pipeline to

refineries located in all parts of the nation. Offshore deposits account

for 13 percent of total production. Coal production, important for

industry and for the generation of electric power, comes primarily from

Wyoming (29 percent of U.S. production in 1997), West Virginia (18

percent), and Kentucky (16 percent).

Important metals mined in the United States include gold, copper, iron

ore, zinc, magnesium, lead, and silver. Iron ore is found mainly in

Minnesota, and to a lesser degree in northern Michigan. The ore consists

of low-grade taconite; U.S. deposits of high-grade ores, such as

hematite, magnetite, and limonite, have been consumed. Leading industrial

minerals include materials used in construction—mainly clays, lime, salt,

phosphate rock, boron, and potassium salts. The United States also

produces large percentages of the world’s output for a number of

important minerals. In 1997 the United States produced 42 percent of the

world’s molybdenum, 34 percent of its phosphate rock, 22 percent of its

elemental sulfur, 17 percent of its copper, and 16 percent of its lead.

Major deposits of many of these minerals are found in the western states.

B Manufacturing and Energy Sector B1 Manufacturing

The United States leads all nations in the value of its yearly

manufacturing output. Manufacturing employs about one-sixth of the

nation’s workers and accounts for 17 percent of annual GDP. In 1996 the

total value added by manufacturing was $1.8 trillion. Value added is the

price of finished goods minus the cost of the materials used to make

them. Although manufacturing remains a key component of the U.S. economy,

it has declined in relative importance since the late 1960s. From 1970 to

1995 the number of employees in manufacturing declined slightly from 20.7

million to 20.5 million, while the total U.S. labor force grew by more

than 46.2 million people.

One of the most important changes in the pattern of U.S. industry in

recent decades has been the growth of manufacturing in regions outside

the Northeast and North Central regions. The nation’s industrial core

first developed in the Northeast. This area still has the greatest number

of industrial firms, but its share of these firms is smaller than in the

past. In 1947 about 75 percent of the nation’s manufacturing employees

lived in the 21 Northeast and Midwest states that extend from New England

to Kansas. By the early 1990s, however, only about one-half of

manufacturing employees resided in the same region. Since 1947, the

South’s share of the nation’s manufacturing workers increased from 19 to

32 percent, and the West’s share grew from 7 to 18 percent.

In the North, manufacturing is centered in the Middle Atlantic and East

North Central states, which accounted for 38 percent of the value added

by all manufacturing in the United States in 1996. Located in this area

are five of the top seven manufacturing statesa—New York, Ohio, Illinois,

Pennsylvania, and Michigan—which together were responsible for

approximately 27 percent of the value added by manufacturing in all

states. Important products in this region include motor vehicles,

fabricated metal products, and industrial equipment. New York, New

Jersey, and Pennsylvania specialize in the production of machinery and

chemicals. This area bore the brunt of the decline in manufacturing’s

value of national output, losing a total of 800,000 jobs from the early

1980s to the early 1990s.

In the South the greatest gains in manufacturing have been in Texas. The

most phenomenal growth in the West has been in California, which in the

late 1990s was the leading manufacturing state, accounting for more than

one-tenth of the annual value added by U.S. manufacturing. California

dominates the Pacific region, which specializes in the production of

transportation equipment, food products, and electrical and electronic

equipment.

B1a International Manufacturing

United States industry has become much more international in recent

years. Most major industries are multinational, which means that they not

only market products in foreign countries but maintain production

facilities and administrative headquarters in other nations. In the late

1990s, giant U.S. corporations began a wave of international

partnerships, with U.S. companies sometimes merging with foreign

companies.

Beginning in the early 1980s, U.S. companies increasingly produced

component parts and even finished goods in foreign countries. The

practice of a company sending work to outside factories to reduce

production costs is called outsourcing. Foreign outsourcing sends

production to countries where labor costs are lower than in the United

States. One of the first methods of foreign outsourcing was the

maquiladora (Spanish for “mill”) in Mexican border towns. Manufacturers

built twin plants, one on the Mexican side and one on the United States

side. Companies in the United States sent partially manufactured products

into Mexico where labor-intensive plants finished the product and sent it

back to the United States for sale. Outsourcing to Mexico became more

widespread after the North American Free Trade Agreement went into effect

in 1994. Firms in the United States also outsource to many other nations,

including South Korea, Indonesia, Malaysia, Jamaica, and the Philippines.

In the 1990s, few products were made entirely within the United States.

Although a product may be fabricated in the United States, some component

parts may have been produced in foreign countries. Despite outsourcing

and the international operations of multinational firms, the United

States is still a major producer of thousands of industrial items and has

a comparative advantage over most foreign countries in several industrial

categories.

B1b Principal Products

Ranked by value added by manufacturing, in 1996 the leading categories of

U.S. manufactured goods were chemicals, industrial machinery, electronic

equipment, processed foods, and transportation equipment. The chemical

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