...Daniel Bibonge Amsini Econ 412 December 18th, 2014 The US and its Current Account Deficit America's current account deficit has been fluctuating over the past 20 years. From 1991 it rose to a record high of about 6% of GDP in 2006 and it began to fall a year later to finally reach a level of 3% of GDP in 20091. Capital inflows finance the current account deficit. Economists are wondering if such large inflows are sustainable. According to economic theory, a current account deficit is not necessarily harmful as it stimulates a period of inward investment that can actually boost a country’s employment and investments. The current account deficit is still considered too large even at 3% and there is fear that it is caused by the recession. However economists believe that the US current account deficit may actually contribute to its development and attract foreign investors. The current account deficit is actually a good arsenal for the development of a country. For example, Japan invested a lot in the UK and this caused the emergence of new jobs in addition to the increased investment. The following paragraphs will enlighten more about how the current account of the US can affect its economy. 1 Feenstra, Robert C., and Alan M. Taylor. "National and International Account." International Macroeconomics. New York: Worth, 2012. 172-77. Print. A current account deficit (CAD) occurs when a country has an excess of one or more of the four factors (goods, services...
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... Economic Critique Describing the current state of U.S. economics, we will discuss several factors to include unemployment, future expectations, consumer income, and interest rates. We will identify the existing effect of the economic factors on aggregate demand and supply. In addition, we will identify current recommended fiscal policies by government leadership. With this information, we will then evaluate the effectiveness of the current fiscal policy recommendations from both the Keynesian and Classical model perspectives. To better understand what the state of the unemployment situation is in today’s current economy, it was determined that a good place to start was with the Bureau of Labor Statistics (BLS) or the U.S. Department of Labor. The first quarter tally of 2013 is not available until February 2, 2013. Therefore, we based our calculations on the data from December 2012. According to the BLS, the definition of the unemployed is, “Persons aged 16 years and older who had no employment during the reference week, were available for work, except for temporary illness, and had made specific efforts to find employment sometime during the 4-week period ending with the referenced week. Persons waiting to be recalled to a job from which they were laid off need not have been looking for work to be classified as unemployed” (US Department of Labor, 2012). Currently there are 12.2 million unemployed persons in the United States, with little change in December. The...
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...Assignment Questions - Current Account Deficit Case 1. Why has the United States developed such large current account deficits? Slow economic growth, reduced imports and spending in access of income has caused a large deficit in US current account. 2. Is the U.S. current account deficit in 2005 sustainable? Is its continual widening a problem? Is it an economic problem? A political one? Is the United States headed toward crisis? Why or why not? Yes the U.S current account deficit in 2005 would have been sustainable, but the deficit continued to widen. The NIIP went up to 27% in 2011. The continual widening of deficit is a major problem as the interest payments are growing and the capital inflow from abroad is not moving into tradable sectors. If the trade deficit sustained, the US economy will face financial crises. This is a major economic problem because this leads to severe inflation, fall in price of assets like equity and housing and will also slowdown global economy which leads to global recession. This takes US towards global crises as the slowdown or pause in economy would lead to depreciation of the US dollars which in turn will raise the import prices. This rise in import prices would lead to fewer margins and would further lead to unemployment. 3. What, if anything, should the United States do to reduce its current account deficit? The current account deficit problem can be solved by competing in the global economy by using supply policies in trade...
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...Zack Fellows Professor Gilliard English 1190 M/W 1200-155 How Patent and Copyright Laws are Contracting our Economy Patent and copyright laws have played a very intricate role in the United States economy all throughout our history. Most recently, they have played a very crucial role in protecting intellectual property, distinct types of creations of the mind for which a set of exclusive rights are recognized under corresponding fields of law. When the United States put into agreement the North American Free Trade Agreement(NAFTA) , and opened up a lot of our trade barriers with countries all of the world, the key idea was that we were going to begin to change the face of our economy. We were going to do this by profiting off of our intellectual property and enforcing our strong patent and copyright laws around the world while slowly ridding ourselves off our manufacturing base. As the years passed, patent and copyright applications soared through the roof and it seemed as if the idea of intellectual property was working very efficiently. Innovation seemed to be coming from everywhere as there was a high motive to be able to patent or copyright your idea and make heavy profits. This innovation was a crucial part in the rapid expansion of our economy during the 1990’s, but soon this expansion came to a halt. This is heavily due to the fact of the enormous number of patents and copyrights that are being issued: over 240,000 in 2010, which in turn is hindering people’s innovation...
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...This essay shall discuss the most current U.S. GDP figures and the current state of the economy. It will also discuss how the current state of the economy will or will not impact my organizational profitability, using the Timken Company. The most current figures available for GDP are in reference to 2014. GDP is the measure of all final goods and services made in a year, and made in the United States. This does include foreign country operations that are located in the U.S., however it excludes U.S. plants in foreign countries. The GDP numbers are important because it represents how well the economy is doing. An economy doing poorly will have lower profits for businesses, which effects stock price. This is significant to investors that look at GDP growth, and if it is negative it could suggest that the economy is in a recession. The real GDP is the most looked at figure in discussion with the economy. Real GDP is comparing one year to the other taking out the effects of inflation calculated by the Bureau of Economic Analysis (BEA). According to the BEA, the U.S. GDP increased 2.4 percent in 2014 from the figures found in 2013. The results I will also look at is the latest fourth quarter of 2014, because GDP is reported quarterly as well. The GDP is a very in depth and comprehensive report, therefore I will concentrate on the most important numbers that the report contains. The extras that the report contains breaks down personal consumption expenditures, gross...
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...Short answer The main macroeconomic cause of gfc US households actually reduced their savings from 2000. The household savings rate in the US actually became negative! Graphs ppt People save more when higher IR, Spend more when low IR 1. Monetary policy (low short term IR) The literature has identified a number of channels through which monetary policy might have contributed to the build-up in financial imbalances. Most of these are thought to have worked through policy rates that were kept low for too long.8 Loose monetary policy (a low short-term rate) may have i) reduced the cost of wholesale funding for intermediaries, leading those intermediaries to build-up leverage ii) may more generally have caused banks to take more risks, including credit and liquidity risks (iii) may have increased the supply of and demand for credit (mortgages), causing asset (house) prices to rise 2. Global imbalances ( low long term IR) Rising global imbalances are associated with a greater spread of current account positions across countries and larger net flows of capital between countries. global excess of desired savings relative to desired investment—a “savings glut(과잉)”— had reduced long term rates globally, including in the United States.(significant increase of supply of saving cause a low ir), it argued that high capital inflows were an important reason of low IR from 2003- 2007 High capital inflows in turn (i) can reduce the cost of wholesale funding for domestic...
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...Aggregate Demand and Supply Models Introduction Social, technological and political changes in the US and around the world affect the U.S. economy today. Even if the U.S. economy presently remains as one of the world’s largest economy, the country is now in deep recession and must The purpose of this paper is to understand the prevailing economic trends in the US particularly on unemployment, interest rates, and consumer income including the expectations of both the consumer and business sectors. This paper will also discuss the effect of these economic indicators on the aggregate supply and demand and the evaluation of current fiscal policies that were recommended by the government. This paper aims to let future business managers be aware of the importance of comprehending current US fiscal policies as it outlines the blueprint of change to the US economy. Current Economic Trends Unemployment is a term that you will hear often when spending time in any city in the United States. It is an issue that is spoken of from the dinner table to the oval office. The United States experienced its “worst downturn since the Great Depression” but continues to recover adding 176,000 jobs to the private sector in March-April 2013 and reducing unemployment to 7.5% (Bureau of Labor Statistics, 2013). President Barack Obama has introduced large plans to reform banking in America. The people of the U.S. expect to see banks become more regulated, they expect that home loans will be reasonable...
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...Current Macroeconomic Situation, Fiscal and Monetary Policies Current Macroeconomic Situation, Fiscal and Monetary Policies Introduction As the leading world economy, the United States and has been in a recession since 2008 and the leading outcome of this recession has been no other than unemployment. The newsflash among media and television about this recession has resulted in unemployment, and how to remedy this “current macroeconomic situation”. No one seems to have an immediate solution on how the economy will get better. The news and media do a lot of finger pointing and giving various unpleasant names to the situation such as calling it “the decade of depression”. Our inflation rate is about 2.3%, which is currently lower than the past rate that was 3.4%. As of July 2012, unemployment rate has been around 9.3%, compared to the prior average years back of about 5.6%. Research We all know that if there is unemployment, consumers do not spend as much money and businesses suffer, from that but honestly speaking, not many of us know what these unemployment figures mean or represent for sure. We can assume or estimating what it means without understanding since we were not aware of what it was before or one is not personally affected by the unemployment saga. So it gets to be a bit mind-boggling when some industries throw these percentages out there and expect us all to know what they mean and as a way to get...
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...special report titled “Values Begin at Home, but Who’s Home?” This article reflects America’s current family values. This is an older, but effective report. Heather Boushey was formerly a Senior Economist with the United States Congress Joint Economic Committee and before that, with the Center for Economic and Policy Research and the Economic Policy Institute. She has testified before the U.S. Congress and authored numerous reports and commentaries on issues affecting working families. “Heather Boushey.” Wikipedia: The Free Encyclopedia. Wikimedia Foundation, Inc. 13 July 2015. Web. 29 September 2015.” In this article Boushey argues that work has been winning the work/life battle- beginning with Mothers working outside of the home. Boushey also uses her skills as a former Senior Economist, to hone in on statistical data to prove the decline in family values, since Mother’s began working outside of the home. Heather Boushey article serves a dual purpose- or kairos. Boushey wrote this article stating her negative opinion toward today’s economy and how it affects family values. First, Boushey believes that mothers leaving the home to join the workforce has a negative effect on the well-being of our families and our family values, and secondly persuading us to measure how well our current American economy works for our families. Towards the end of the article Boushey tries to convince us, as voters to take action, by starting at home and telling our leaders that we will pay attention...
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... | Abstract It is no surprise that the economy of The United States of America is going through a cyclical peak. During the various business cycles, economic indicators revealed how the economy is doing based on gross domestic product, employment, inflation, retails sales etc. This paper would critically examine the business cycle and its implications in terms of higher sales, consumer demands and labor cost. It will also analyze how economic indicators such as Real GDP, Unemployment and Inflation have been impacted by the current and unfortunate economic situation faced in the United States today. Introduction The United States, like many other countries, is experiencing a major change in its economic system; and it is currently coming out of a recessionary business cycle which saw the production of goods and services decline, and unemployment on the rise; but the economy is moving at a snail's pace, easing into a peak. The paper will focus on how to interpret the business cycle and explain the current business cycle in the United States through an in-depth and critical look at the economic indicators. These Economic indicators will reveal the current economic situation as well as help to forecast the future direction and growth of the economy in the long run. The Business Cycle What is a business cycle? Business Cycle is the periodic increases and decreases in...
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...since it is the largest market in the world in terms of GDP and produces 30% of the products in the world. The effects of the Chinese military can be felt in the U.S since it has had to withdraw its navy from the pacific and now has smaller global reach. Three out of ten products picked up at Wal-Mart have the all too familiar “Made in China” printed on the back. This future is of course, fictional and too many may seem farfetched and impossible. However, this future is not all that unrealistic and with the current development of China, it may soon be a reality. China is headed towards a future where China is a global superpower economically, militarily and politically. How should American foreign policy address a rising China? Should we be accommodating and welcome a rising China or should we prevent China from ever reaching superpower status? Given the development of China, the way rising powers interact with world powers historically as well as theoretically and current as well as hisotoric Sino-American realations, we should develop a dessisive foreign policy that addresses the potential threat China posses to American Interests. The Chinese Economic Miracle China is everywhere these days. The words “Made in China” are universally recognized. China sews more shoes and stitches more clothes than any other country in the world. It is also...
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...Analysis of Foreign Direct Investments of North America Kristin Daughdril & William Cassidy Business Administration 418 Abstract Foreign Direct Investment (FDI) is an investment involving a long-term relationship and reflecting a lasting interest in and control by a resident entity in one economy of an enterprise resident in a different economy (UNCTAD). There are two types of FDI, inflows and outflows, which can be used to help determine the investment strategies and economies of countries engaged in FDI. North America has been the source of nearly one-half of all investment and almost three-quarters of the jobs created throughout the globe (Huggins, 442). North America is probably the most important continent when it comes to dealing with FDI. The three main countries of North America, the United States, Canada, and Mexico, all rank in the top 15 of world economies, proving them to be desirable partners in FDI transactions. The trends of FDI discussed in this report will be unparalleled to this information and can lead to some predictions on how future trends of the countries of North America will continue to be superior to that of the other continents of the world. Keywords: Foreign Direct Investment, FDI Inflow, FDI Outflow Foreign Direct Investment is investment of a company located in a different country either by buying a company in the country or expanding its business into the country. FDI can be done for many purposes. Companies may have tax incentives abroad...
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...The effectiveness of the US Congress overseeing the US Tax Code The Internal Revenue Code IRC), formally the Internal Revenue Code of 1986, is the domestic portion of Federal statutory tax law in the United States. IRC was published in various volumes of the United States Statutes at Large, and separately as Title 26 of the United States Code (USC). The primary role of the federal tax code is to raise sufficient revenue to pay for government services, benefits, programs, and investments. I am in favor of a tax reform. I believe it is important to have a simplified, transparent tax code that eliminates hidden tax exemptions, credits and deductions that benefit only a few. By improving our tax code, we will be able to incentivize employers to start hiring while also reducing taxes for all. The US Congress needs to do a better job on the current tax code. First, the tax code needs to be more simplified for any American can read and understand it. After I review the current tax code I was more confused. Our current tax code should reflect our current economy. US Congress should not should our code based on who is in office but rather what is best for our economy. Since 1986, Congress has made 15,000 changes to the tax code. So simplifying the tax code, theoretically, would cut back on compliance costs and put more money into the pockets of ordinary taxpayers. Two Major Tax changes America’s tax code is broken and must be reformed. In the quarter century since...
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...studio apartment, which is barely big enough for the two of us, let alone a baby. Therefore, it is time we start thinking about getting a bigger place. But, first we need to think about possible locations we would like to move to. Since our current apartment is far from any services that we need now and that we will need in the future, such as churches, doctors’ offices, hospitals, child care providers, daycare centers, and schools. Once we have found the right area, we then need to take the time to think about and discuss our options of whether we want to rent first to save up money for a down payment or if we feel it is in our best interest to look into buying our home now. This is one of the biggest and most important decisions we will make in our lives, besides getting married and having children, because when you buy a home there is not just the substantial amount of money that is needed as a down payment, but there are other expenses that go along with home ownership. Aside from the financial aspect that figures into our decision, there are several others we need to take into consideration as well. For instance, since I am currently studying economics in college, it has been brought to my attention throughout the class that it is vitally important to have a basic knowledge of the ten principles of economics and to know which of them relates to the decision of purchasing a home. Also, the strength of the economy, not just...
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...Performance of the Indian Economy By: AKANKSHA SHUKLA FT163009 GOVIND NARAYAN DUBEY FT163025 KIRUTHIKA S FT163043 NUPUR BHARARA FT163063 SANJAY NARANJI THANKI FT163082 TEJAS PRAMOD MADAN FT163098 SHABARISH NAMA RADHAKONAIAH FT164080 VARUN M FT164096 As per the recent report by the World Bank, India is all set to be the world’s fastest growing economy by 2015 ahead of China. India’s GDP is forecasted to be 7.5% through 2015 and is forecasted to be 8% in FY16. This improvement can be attributed to the new government’s strong reforms RBI’s inflation focus and falling global commodity prices. GDP : 65445.9 billion Rate of growth (GDP) FY15 | 7.4% | Status of Employment | 29650 billion | India Industrial Production | 4.1% | Agricultural Sector | 18% of GDP ; 4152.28 Billion INR | Services Sector | 65% of GDP | Investment and Consumption expenditure | | Current account Deficit | 0.2% of GDP ; 1.3 billion USD | Fiscal Deficit | 3.9% of GDP ; 1.27 lakh crore INR | Interest Rate | 7.25 % | Net Exports | 22146.75 Million USD | Foreign Exchange Reserve | 355460 Billion USD | Credit Off Take | 10.19% ; Rs 65,24,257 crore | Rate of Growth of States Gross State Domestic Product at current prices State Gross Domestic product at Current Prices It can be seen that Maharashtra contributes the highest among the 33 Indian states and union territories.. The Top 5 States share about 44% of India’s total economy. Eight states of North East India share...
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