in low. The relatively good economic
performance has complicated the BLAIR government's efforts to make a
case for Britain to join the European Economic and Monetary Union
(EMU). Critics point out that the economy is doing well outside of
EMU, and public opinion polls show a majority of Britons are opposed
to the euro. Meantime, the government has been speeding up the
improvement of education, transport, and health services, at a cost
in higher taxes and a widening public deficit.

United States
The US has the largest and most technologically
powerful economy in the world, with a per capita GDP of $43,500. In
this market-oriented economy, private individuals and business firms
make most of the decisions, and the federal and state governments
buy needed goods and services predominantly in the private
marketplace. US business firms enjoy greater flexibility than their
counterparts in Western Europe and Japan in decisions to expand
capital plant, to lay off surplus workers, and to develop new
products. At the same time, they face higher barriers to enter their
rivals' home markets than foreign firms face entering US markets. US
firms are at or near the forefront in technological advances,
especially in computers and in medical, aerospace, and military
equipment; their advantage has narrowed since the end of World War
II. The onrush of technology largely explains the gradual
development of a "two-tier labor market" in which those at the
bottom lack the education and the professional/technical skills of
those at the top and, more and more, fail to get comparable pay
raises, health insurance coverage, and other benefits. Since 1975,
practically all the gains in household income have gone to the top
20% of households. The response to the terrorist attacks of 11
September 2001 showed the remarkable resilience of the economy. The
war in March-April 2003 between a US-led coalition and Iraq, and the
subsequent occupation of Iraq, required major shifts in national
resources to the military. The rise in GDP in 2004-06 was
undergirded by substantial gains in labor productivity. Hurricane
Katrina caused extensive damage in the Gulf Coast region in August
2005, but had a small impact on overall GDP growth for the year.
Soaring oil prices in 2005 and 2006 threatened inflation and
unemployment, yet the economy continued to grow through year-end
2006. Imported oil