The Effect of Macroeconomic Factors on Carbon Emissions in the USA: A Statistical Analysis by Industry Sector

This study investigates how economic factors such as gross domestic product (GDP), industrial production, inflation, and the federal funds effective rate affect carbon dioxide (CO2) emissions across nine major sectors in the United States (U.S). While previous research has primarily concentrated on aggregate national emissions, this analysis takes a sectoral approach by using linear regression analysis to quantify how each economic variable impacts specific categories of CO2 emissions. The findings indicate that economic growth and industrial production are significant contributors to emissions, although their effects differ from one sector to another. Inflation and monetary policy appear to have the weakest and limited statistical significance and influence across sectors. The most significant decrease in CO2 emissions is observed in coal and electric power sectors. Furthermore, we found no significant effects of the 2008 financial crisis and the COVID-19 pandemic on carbon emissions, except a significant impact of the 2008 financial crisis on carbon emissions in the transportation sector. The results highlight the complexity of the relationship between the economy and emissions, underscoring the need for sector-specific policies and technological innovation to help achieve the U.S. goal of net-zero emissions by 2050. This research provides evidence-based insights for policymakers who aim to balance economic development with environmental sustainability.