Abstract

This study investigates how key 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. While previous research has primarily concentrated on aggregate national emissions, this analysis takes a sectoral approach by using linear regression to quantify how each economic variable impacts specific categories of CO₂ emissions. The findings indicate that economic growth and industrial activity are significant contributors to emissions, although their effects differ from one sector to another. In sectors like electric power and total emissions from all fuels, the models account for over 60% of the variation in emissions, emphasizing the strength of these relationships. In contrast, inflation and monetary policy appear to have the weakest and most inconsistent influence across sectors, showing limited statistical significance in most of the models. These 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.