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where is us economy headed?





baboosaa
At $58.3 billion, the United States' trade deficit for January exceeded everyone's worst expectations. The huge mismatch reported yesterday between imports and exports just missed breaking the monthly record, set last November, and is all the more remarkable for occurring in a month when the price of oil actually declined.

The trade deficit is the single most important factor in measuring the extent to which the nation lives beyond its means. As such, it should force us to own up to the dangers of rampant deficit spending. But the White House is showing no sign of action, as if doing nothing might make the problem smaller.

In response to yesterday's trade deficit figure, the dollar weakened against the euro and the yen, and traders predicted further declines in the weeks and months ahead. That, in turn, contributed to a drop in stock and bond prices. Such gyrations are certainly not unprecedented. The dollar has been on a downward trajectory for three straight years and was going into a fresh skid even before the latest trade deficit figure was released.
socceraggie
Obviously this is a very complicated problem that will require some sophisticated solution; however, I think our countries leaders could take a lesson or two from a typical responsible american household that is living within their means. Ever since world war II, our country has continued to spend with no regard for the future. This is not a partisan problem as both major political parties have participated in spending our country into this hole. Our manufacturing industry is broken due to high wages and can not complete with other countries like China. Our financial industry is broken because greedy SOBs are running the banking and investing industry. Our technology industry is on its way to being broken. Our educational system is broken because schools have too many incompetent teachers on tenure. Finally our country is loosing its competitive edge when it comes to math and science. I think the dismantling of NASA will have long term negative impacts to our country's access to brilliance.
hunnyhiteshseth
Infact devaluation of dollar may automatically correct this deficit problem. Once dollar is sufficiently depreciated US goods would be cheaper for other countries and US exports will rise and imports fall.
slashnburn99
Tourists would help

If the Governemnt could supplement for instance flights to your country i would be over there in a shot or some kind of reward scheme for dollars spent while travelling.
standready
As long as US keeps adding service jobs instead of manufacturing jobs that make "real" goods to export then the trade deficit will continue to increase.
LimpFish
The US has extremely low taxes (lucky bastards), will they be forced to increase them now to grab a hold of their economy?
hunnyhiteshseth
I don't think US is going to increase taxes anytime soon. With unemployment at such a high level, no party will dare to increase taxes, no matter how much needed those tax rise may be.
abhinavgakhar
really a good point made by hunnyhiteshseth....I must say...
menino
The US does not need to increase the taxes of income of the people - but probably taxes of incoming goods, and other entities that do not have much impact on the jobs sector.
If the US does increase taxes on imports, it may increase jobs in the US to try and increase those goods requirements in their own country, thereby giving more jobs to people in the US itself.

I think in due course of time, the US economy will improve, but when is the trillion dollar question.
hunnyhiteshseth
Increasing taxes on imported goods would be a foolish step by US government. It may lead to retaliation by other countries leading to isolation of US from world trade and ultimately more harm to US jobs.
deanhills
I think the key to recovery in the US is to spend less but in a very focussed way. Create less Government, amalgamate some of the Departments into one, for States to get their power back. The States also need to have less Government with less regulations. Why so many members of Congress and why do they have to be permanently stationed in Washington DC at the cost of the tax payers? There are so many costs that can be trimmed. And the best place to start is in Government. As it seems to be gobbling up most of the funds in pure unadulterated bureacracy and overblown administration.
LimpFish
hunnyhiteshseth wrote:
Increasing taxes on imported goods would be a foolish step by US government. It may lead to retaliation by other countries leading to isolation of US from world trade and ultimately more harm to US jobs.


Exactly. Raising tolls seems sweet at a first look, but when considering the consequences, it might do more harm than good....
socceraggie
Historically, when tariffs have been applied to imports on a broad scale, it results in an isolationism environment. Essentially removing the US from the global economy.
menino
Although the us economy is stabilizing, albeit very slowly, its true that they need to cut spending and unnecessary tax dollars, not just inside the US, but outside as well.... and one of these spending cuts is the war in Iraq and Afghanistan, which is costing them a huge lot, and in return, I don't think they will be getting back much of it.

The War in Iraq and Afghanistan, has to some extent given something back to the US economy, in terms of businesses started by Americans and ex military personnel, who buy goods from the us and sell in the Arab countries, but this may not account for a lot on building up or restoring the US economy, but I don't have these figures as such.
pll
Americans will need to take care of their wallets.
And I think that governement will become to take more and more place in the lives of americans.

Like here in canada where governements gets half of my pay in imposition and taxes.
standready
deanhills wrote:
I think the key to recovery in the US is to spend less but in a very focussed way. Create less Government, amalgamate some of the Departments into one, for States to get their power back. The States also need to have less Government with less regulations.

Unfortunately, both federal and states disagree with you. They think it cuts unemployment numbers so they can say they are doing something to reduce a "number". Plus, if they cut jobs, how would they thank their buddies without those (most of the times, ghost) jobs.

deanhills wrote:

Why so many members of Congress and why do they have to be permanently stationed in Washington DC at the cost of the tax payers?

Because of the Constitution. It gives representation to districts. Why in this electronic age we now have are they stationed in DC is a good question. My answer is they don't like change (sorry O'bama) and more convenient for lobbyist instead of the people they are suppose to represent.
Why do we still have the electoral college when election results are instantaneous? Because of the Constitution.

deanhills wrote:

There are so many costs that can be trimmed. And the best place to start is in Government. As it seems to be gobbling up most of the funds in pure unadulterated bureacracy and overblown administration.

See first reply.
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