The Current State of the U.S. Macro Economy

The Current State of the U.S. Macro Economy

Introduction

In the United States the international trade of goods and services affect virtually every single person living in the country. In the world United States is one of the three largest exporters including Germany and China, but the huge sales of the United States are outshine by the emerging demand of imported products by the United States consumers. The increased demand of imported products has resulted in a continual increased rate of merchandise trade deficit. It has been evidenced that the United States is facing the ebbs and flows of the U.S trade deficit on goods since 1976. At the economic level, this increasing trade deficit rate is a special concern for the U.S government as it affecting the United States interest rate, economic growth, labor and the debt load of the economy.

Surplus Amount of Imports in the United States

In the year 2012, the United States merchandise rate of export increase by 6% while the imports increased by 5%. The frequent fluctuations of the U.S import and export rate has increased the U.S trade deficit. It has been examined that the U.S runs a surplus in trade in services while on the other hand a prominent deficient in the trade in goods. In the year 2012, the total of combined deficit on goods and services was comparatively lower than the deficit identified on the goods alone. When in a country like the United States the trade deficit rate increase, it reflects the increase of imports in comparison to the exports. The imbalance quotient of import and export signifies that the domestic economy is facing the shortage of savings and the reliance on capital imports to finance and meet the shortfalls. The shortfalls of savings indicate the excessive spending and financing on borrowing. Numerous nature of borrowing can be examined such as businesses borrow to invest, households borrow for consumption and the government eventually borrows to recover its budget deficit (Williams and Donnelly, 2012).

To distinguish whether these foreign borrowing are beneficial for the economy or not merely depends upon the capital used from the imports. If the capital is used for finance investment than it signifies a sufficient high rate of return for the current and future generation but if the imports are used for current consumption then they just burden up the future generation with future repayments. Hence, changes in the trade balance in the U.S effect and bring changes on the U. S economy.

Example

America is the largest importer of goods even being the richest country of the world. The U.S importing of goods rose to approximately $2.263 trillion in 2011. Among the top US imports from China is the electronic equipment amounting approximately $101.2Billion in the year 2011. The high quality electronic products of China are compelling the U.S consumer to buy foreign country product.

Impact of Surplus Imports

The biggest threat of the increase rate of trade deficit especially due to the increase imports ...