Business Principles

A second measure of a nation’s wealth is the individual well-being of its citizens. Although GDP figures are helpful in judging the overall growth of an economy, such figures by themselves tell little about the economic worth of individuals.

However, the U.S. Department of Commerce gathers information that reveals the financial well-being of U.S. citizens.

With increased income, an average family improves its level of living. Over 65 percent of all families live in homes they own. Many families now own items that less than 50 years ago were considered luxuries by most households. For example, almost all homes have refrigerators and more than one television. Sixteen percent of homes have two or more refrigerators and over one-third own a large-screen television. The number of homes with access to cable or satellite televisions has grown rapidly, with over 75 percent having that type of access. Over half of all adults in the United States carry cell phones today and some families give cell phones to their children before they are 10 years old.

In addition to consumer products, Americans also invest money in self-improvement, including education, exercise and fitness, and personal-care products. They participate in life-enrichment activities by attending the theater and concerts and by traveling in this country and abroad. Despite these large expenditures on material goods and services, Americans also put some of their money into savings. The amount of savings varies from year to year, with total annual savings by Americans averaging over $100 billion.

Even though the typical American has done well financially compared to people in other countries, economic and social problems still exist. For example, slow economic periods may create job shortages, layoffs, and reduced incomes. Some people cannot find employment because of inadequate skills or reductions in the supply of jobs caused by business failures or relocation of companies to other states and other countries. When incomes drop, it becomes more difficult to buy homes, to send children to college, and to save for retirement. Increasing costs for medical care, insurance, gasoline, and electricity put pressures on many people, especially those with low or fixed incomes. Although the United States is a prosperous nation, many people live in poverty. In recent years, over 10 percent of all American families had incomes below the poverty level of about $18,000 for a family of four. Among the results of poverty are poor housing conditions, inadequate nutrition, and lack of access to health care and quality education. You will learn more
about these and similar problems in later chapters. The health and well-being of both a country’s businesses and its citizens are important to its long-term success.