2/10/2005

U.S. Trade Deficit Hits Record $600 Billion

According to an article in the New York Times, the American trade deficit broke the $600 billion barrier in 2004. The figure amounts to more than 5 percent of the American economy. Treasury Secretary John W. Snow, said that “the ability of American Consumers to buy more imports demonstrated that the American economy was growing faster than other countries, and according to the Treasury Department spokesman, Rob Nichols, “We are importing more than those other economies, because we are creating more disposable income than they are.” So when is the trade deficit going to go down, and as consumers, what can we do about it? Is this were “Buy American” could come into play? One answer or a factor that will help out the trade deficit is that the US dollar has been declining recently, which should make American exports cheaper and hopefully more attractive to overseas consumers.

5 comments:

BOB said...

If America chooses to adopt the motto of "Buy American," we will all be hurt. A perfectly competitive market is the answer to the problem. The marvelous market will inform consumers when they need to cut their import spending back. Until then, let's enjoy the imported goods!

Marie said...

It is great that we import goods, it truly is what make our economy thrive, as well as exports. America will only hurt its self if it decides to only sell American goods in America. American goods will eventually find it's selling margins to where American goods will be more desirable. Perhaps there lower prices will give the needed edge to sell well.

Keston said...

I just happened to read these few comments, and I wasn't really getting the answers I wanted. I'm not saying that Americans should only buy American. What I was trying to get at is what can we do to relieve the deficit? We have a trade deficit because we import more than we export and so what I really wanted to know was how to get rid of the defict, and "Buying American" was just a suggestion. So if you can, give me some suggestions on how to get rid of the defict, not whether "Buying American" is good or bad.

June said...

According to Daniel Griswold, director of the Center for Trade Policy Studies at the Cato Institute, a trade deficit is not necessarily a bad thing. He cites statistical data which leads to the conclusion that an increase in the trade deficit is actually associated with faster, not slower, domestic economic growth. In times of a growing trade deficit there is also and increase in manufacturing output, and a decrease in unemployment.

Perhaps we shouldn't decrease the trade deficit at all. Maybe we should increase it. Check out www.freetrade.org for more information.

scott said...
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