Essay Sample on US Air Transport Industry: Critical Element in Economy

Introduction

Industries are critical elements in the United States' economy as they positively contribute to the growth of this economy. Air transport is one of the most vital industries in the United States. This industry is usually involved in providing air transportations to people and goods using aircraft such as helicopters and airplanes (US Census Bureau, 2020). The sector is usually divided into scheduled and nonscheduled air transport, on the one hand, the latter involves flying regular routes regardless of whether the flights are partially loaded. Nonscheduled air transportation, on the other hand, involves flights that do not operate regularly but only during nonpeak time slots, and they mostly offer chartered transport service to passengers and cargo. It is worthwhile noting that scenic and sightseeing air transportation is not included in this sector because their services are not similar to those that are included in air transportation (US Census Bureau, 2020).

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Industry's Relative Size and Growth Rate in the Economy

The air transportation industry contributes immensely to the growth of the economy. Usually, the Gross Domestic Product (GDP) is a measure of economic growth, and it usually involves measuring the total amounts of goods and services that are produced in a country. The transportation and warehousing sector contributed to 3.1% of the country's GDP in 2016 and 2017 and 3.2% in 2018 and 2019 (Bureau of Economic Analysis, 2020). The sector has eight subsectors, including air transport, which contributed consistently towards the growth of the economy with a rate of 0.7%, which replicates to 20% contribution by this subsector (Bureau of Economic Analysis, 2020). The gross output is the other measure of the economy, and this usually gauges the total economic activity in the production of goods and services. It is different from the GDP in that it measures the economy from a broader perspective in that it does not only consider finished goods and services like the GDP. In total, all the industries in the country contributed amounts of $ 33434.6 billion, $ 35296.6 billion, $ 37184.6 billion, and $ 38005.2 billion in the last quarter of 2016, 2017, 2018, and 2019, respectively (Bureau of Economic Analysis, 2020). Out of these amounts, the transportation and warehousing sector contributed $1148.9 billion, $ 1202.9 billion, $1299.5 billion, and $1285.6 billion, respectively. Out of this amount contributed by the entire sector, air transportation contributed $213.1 billion, $ 226.7 billion, $ 243.8 billion, and $247.9 billion in 2016, 2017, 2018, and 2019, respectively (Bureau of Economic Analysis, 2020). The above amounts reveal how important the sector has been to the American economy.

Air transportation has contributed immensely to the economy in terms of the GDP. Data from the Bureau of Economic Analysis shows that in five years (from 2014 to 2018), the United States' economy showed positive growth. In 2014, the total GDP was $ 31740.0 billion. It increased to $32176.7 in 2015 and further to $32838.5 billion, $34495.4 billion, and $36593.3 billion in 2016, 2017, and 2018, respectively (Bureau of Economic Analysis, 2020). Out of these amounts, air transportation contributed amounts of $211.4 billion, $211.2 billion, $209.7 billion, $221.4 billion, and $238.2 billion in 2014, 2015, 2016, 2017, and 2018, respectively. (Bureau of Economic Analysis, 2020). These contributions represented percentage increases of 2.6%, 3.9%, 1.5%, 4.0, and 4.5% from 2015 through to 2018, respectively.

Macroeconomic Indicator (Inflation)

Macroeconomic indicators are parameters that highlight the real current states of the economy. Inflation is one of the economic indicators that are widely used to give insights into the economy, and this macroeconomic indicator usually highlights percentage changes in prices from one year to the other in a country. One can point out that inflation rates in the United States have been inconsistent over the last two decades and this could be blamed on the economic anomalies that have been experienced over the years, including the financial crisis that persisted in as well as the tech bubble burst that was prevalent in 2000. The inflation rate stood at 3.4% in 2000. However, in the following year, this rate reduced to 1.6% before increasing to 2.4% in 2002. 2003 was marked by inflation reduction to 1.9%, but in 2004 and 2005, the inflation rate increased to 3.3% and 3.4%, respectively (Bureau of Economic Analysis, 2020). In the following year, the inflation rate reduced to 2.5%, but this was short-lived as it increased significantly in 2007 to stand at 4.1%. It was in 2008 that the economy faced a financial crisis, which was marked by contraction, and this year, the inflation rate reduced to 0.1%. The rate increased to 2.5% in 2009, but it reduced to 1.5% the following year. The same inconsistency was prevalent in the second decade; since 2011. Inflation rose to 3.0% in 2011 but decreased in the next four years. This was marked by rates of 1.7% 1.5%, 0.8%, and 0.7% in 2012, 2013, 2014 and 2015, respectively. However, the inflation rate increased in 2016 to record 2.1%, and this rate remained stagnant in 2017 (Bureau of Economic Analysis, 2020). The inflation rate reduced in 2018 to 1.9% and later increased to 2.3% in 2019

Conclusion

In my opinion, the air transportation industry has a bright future in the United States. The fluctuating rates can widely be blamed on the economic crisis witnessed at the end of the first decade of the 21st century. The United States has since recovered slowly from the crisis, and thus the inflation rates are stabilizing. Additionally, the air transportation industry is a relevant sector that the economy highly depends on for growth. It is highlighted by the amounts that this industry contributes as a percentage of the GDP. At the same time, the amounts contributed have risen over the years, a revelation that the industry will remain relevant even in the future. The fact that the US is a generator of new technologies in this industry is also a reflection of how important this industry will be as the country will export new technologies in this industry.

Source List

Bureau of Labor Statistics, 2019, Databases, Tables & Calculators by Subject: CPI-All Urban Consumers (Current Series), https://data.bls.gov/timeseries/CUUR0000SA0L1E?output_view=pct_12mths

Bureau of Economic Analysis, 2020, Interactive Access to Industry Economic Accounts Data: GDP by Industry, https://apps.bea.gov/iTable/iTable.cfm?ReqID=51&step=1

Bureau of Economic Analysis, 2020, Percent Changes in Chain-Type Quantity Indexes for Gross Output by Industry, https://apps.bea.gov/iTable/iTable.cfm?ReqID=51&step=1

Bureau of Economic Analysis, 2020, Value Added by Industry as a Percentage of Gross Domestic Product, https://apps.bea.gov/iTable/iTable.cfm?ReqID=51&step=1

US Census Bureau, 2020, North American Industry Classification System: Air Transportation, https://www.census.gov/cgi-bin/sssd/naics/naicsrch?chart_code=48&search=2017%20NAICS%20Search