Yet another record for this amazing Economy

[Zorba]

Link

Deficit was $69.9B in August up from $68B in July. Trade deficit with china and mexico is up. How long can we keep up these record deficits?

 

[Genx87]

Originally posted by: Zorba
Link

Deficit was $69.9B in August up from $68B in July. Trade deficit with china and mexico is up. How long can we keep up these record deficits?

We have been running trade deficits for years if not decades. I would say we can keep it up indefinately provided we keep growing our economy the way we have the past few years.

Believe we have added nearly 2 trillion in GDP since 2002 and believe we are projected to push over 13 trillion this year.


Yup

2002 GDP == 10.4 Trillion
2006 estimated at 13.2 Trillion

 

[sandorski]

It can only go on until Foreigners decide not to finance it anymore.

 

[Witling]

I have long been an advocate on this forum for the fact that we're going down the tubes financially. Check out Jared Diamond's book Collapse. When you live in the system, you think things are normal. But, as Jared postulates, What did the person who cut down the last tree on Easter Island think?

 

[maluckey]

Foreigners will not do that so long as the American GDP increases.

 

[LegendKiller]

Originally posted by: Genx87

Originally posted by: Zorba
Link

Deficit was $69.9B in August up from $68B in July. Trade deficit with china and mexico is up. How long can we keep up these record deficits?

We have been running trade deficits for years if not decades. I would say we can keep it up indefinately provided we keep growing our economy the way we have the past few years.

Believe we have added nearly 2 trillion in GDP since 2002 and believe we are projected to push over 13 trillion this year.


Yup

2002 GDP == 10.4 Trillion
2006 estimated at 13.2 Trillion

GDP is a piss-poor measurement that people love to throw around like a umbrella to protect them from the storm. They forget that some GDP growth comes at a very high cost, in this case, massive use (abuse) of leverage, a housing bubble, and equity cash-out.

GDP is already predicted to fall 1% just because the downturn from housing *builders*. That doesn't include the negative growth that will probably be experienced due to higher unemployment and such once the real shockwave hits.

 

[Witling]

Genx87. I hope you stay in the forum for a few years. You're dead wrong. Unfortunately for me, many of the go go boys supporting the Iraq war have left the board. Those who thought that Iraq would work out well were full of $hit. Tose who think we can maintain this deficit trade are --- well, Genx87, hope to see you here in the future.

 

[Zorba]

Originally posted by: Genx87

Originally posted by: Zorba
Link

Deficit was $69.9B in August up from $68B in July. Trade deficit with china and mexico is up. How long can we keep up these record deficits?

We have been running trade deficits for years if not decades. I would say we can keep it up indefinately provided we keep growing our economy the way we have the past few years.

Believe we have added nearly 2 trillion in GDP since 2002 and believe we are projected to push over 13 trillion this year.

Yup

2002 GDP == 10.4 Trillion
2006 estimated at 13.2 Trillion

I know we have had the trade deficits for decades. But they are going up a lot faster than GDP. We are on track for a ~10% increase in trade deficit for this year. Also a lot of the GDP growth in the last five years has been from deficit spending, from all the people treating their homes as a two story ATM. I can't find the link that shows this right now, I will look again later.

 

[dullard]

The trade deficit is one of the few things keeping our economy going so well. Remember, a trade deficit is a good thing. It means we got an extra $69.9B pumped into our economy last month.

A trade deficit is bad IF it is significantly hurting our businesses. However, business profit has been going along quite nicely, and in turn business tax receipts are filling our governement's coffers quite well this year.

Studies have shown that the GDP grows in years that the trade deficit grows (ie it shows that we have lots of spare cash to buy foreign stuff). GDP and the economy does poorly when the trade deficit shrinks (ie we can't afford to buy their stuff). The fact that trade deficit is growing means our economy is still growing. You should be happy.

Another way to look at it. There is a $100 device that you really want. You find it on rebate for $40 after rebate. You pay $40, and you get $100 worth of stuff. There was a trade deficit of $60. That $60 is damn good for you. And it is bad for the outsider who lost $60 on the rebate. Same thing with countries. It is good for us to get more stuff in trade for less stuff. And it is bad for the countries that gave us a $69.9B "rebate".

So, sit back and enjoy your free $233 worth of goods/services that each American averaged last month.

 

[IamDavid]

Originally posted by: Zorba
Link

Deficit was $69.9B in August up from $68B in July. Trade deficit with china and mexico is up. How long can we keep up these record deficits?

I think you need to go back to economics class and learn of the TRUE effects of a trade deficit in a economy like ours..

 

[Genx87]

Originally posted by: Zorba

Originally posted by: Genx87

Originally posted by: Zorba
Link

Deficit was $69.9B in August up from $68B in July. Trade deficit with china and mexico is up. How long can we keep up these record deficits?

We have been running trade deficits for years if not decades. I would say we can keep it up indefinately provided we keep growing our economy the way we have the past few years.

Believe we have added nearly 2 trillion in GDP since 2002 and believe we are projected to push over 13 trillion this year.

Yup

2002 GDP == 10.4 Trillion
2006 estimated at 13.2 Trillion

I know we have had the trade deficits for decades. But they are going up a lot faster than GDP. We are on track for a ~10% increase in trade deficit for this year. Also a lot of the GDP growth in the last five years has been from deficit spending, from all the people treating their homes as a two story ATM. I can't find the link that shows this right now, I will look again later.

So what else is new? Outside of a couple of years in the 1990's we have had trade deficits and deficit spending. Why is it all of a sudden a concern?

Our economy keeps growing, people's standards of living continue to increase ect.

If we are concerned about budget deficit spending, we can surely cut spending to lower our ridiculous size of govt we are living under.

And I dont really believe our rise in gdp growth is strictly due to govt deficit spending.

 

[dmcowen674]

Originally posted by: Genx87
So what else is new? Outside of a couple of years in the 1990's we have had trade deficits and deficit spending. Why is it all of a sudden a concern?

Our economy keeps growing, people's standards of living continue to increase ect.

You keep believing that until you cannot afford health care or a decent roof over your head.

 

[ayabe]

Knowledge

Guys read this please, I think it sums the issue up nicely.

 

[sandorski]

Originally posted by: dullard
The trade deficit is one of the few things keeping our economy going so well. Remember, a trade deficit is a good thing. It means we got an extra $69.9B pumped into our economy last month.

A trade deficit is bad IF it is significantly hurting our businesses. However, business profit has been going along quite nicely, and in turn business tax receipts are filling our governement's coffers quite well this year.

Studies have shown that the GDP grows in years that the trade deficit grows (ie it shows that we have lots of spare cash to buy foreign stuff). GDP and the economy does poorly when the trade deficit shrinks (ie we can't afford to buy their stuff). The fact that trade deficit is growing means our economy is still growing. You should be happy.

Another way to look at it. There is a $100 device that you really want. You find it on rebate for $40 after rebate. You pay $40, and you get $100 worth of stuff. There was a trade deficit of $60. That $60 is damn good for you. And it is bad for the outsider who lost $60 on the rebate. Same thing with countries. It is good for us to get more stuff in trade for less stuff. And it is bad for the countries that gave us a $69.9B "rebate".

So, sit back and enjoy your free $233 worth of goods/services that each American averaged last month.

That's an ass-backwards way of looking at it. The Trade Deficit does not contribute to GDP Growth, it just indicates it, for the US anyway. The Trade Deficit shrinks when GDP Growth is poor, expands when GDP Growth is good.

This is not a maintainable situation. Foreign Financing is what keeps the US Economy from tanking due to the Trade Deficit. Eventually the US needs to eliminate that Deficit or it will become saddled with a crippling situation that potentially will end its' run as a Super Power.

 

[dullard]

Originally posted by: sandorski
The Trade Deficit does not contribute to GDP Growth, it just indicates it, for the US anyway.

That is exactly what I just said.

The Trade Deficit shrinks when GDP Growth is poor, expands when GDP Growth is good.

Again, that is exactly what I just said.

If the trade deficit shrinks, it means our GDP Growth was poor. And people here wish the trade deficit will shrink. OF course that means, they wish the GDP growth was poor. That is the ass-backward's way of thinking. Why would anyone wish that your own GDP does poorly?

 

[sandorski]

Originally posted by: dullard

Originally posted by: sandorski
The Trade Deficit does not contribute to GDP Growth, it just indicates it, for the US anyway.

That is exactly what I just said.

The Trade Deficit shrinks when GDP Growth is poor, expands when GDP Growth is good.

Again, that is exactly what I just said.

If the trade deficit shrinks, it means our GDP Growth was poor. And people here wish the trade deficit will shrink. OF course that means, they wish the GDP growth was poor. That is the ass-backward's way of thinking. Why would anyone wish that your own GDP does poorly?

"The trade deficit is one of the few things keeping our economy going so well. "

 

[BlancoNino]

When all of this war stuff ends it should be doing even better. Also, we need a president who is willing to cut even more taxes, cut social spending (Bush has increased it, that backstabbing traitor of his own party) of the federal budget, and reduce the size of our military.

LETS BRING OUT FEDERAL GOVERNMENT BACK TO WHAT ITS SUPPOSED TO DO!

 

[slash196]

We have a trade deficit because we don't export ANYTHING. EVERYTHING is done overseas now. This contributes not only to the trade deficit, but to the poor state of the domestic economy as well (since we're not producing any good, no one is being paid to produce those goods). Pretty much the only thing we've got going for us is our agricultural capacity, and even that probably won't last, considering the irreparable damage CAFOs and monocultured megafarms are doing to our ecosystem. And it's AMERICAN companies that are profiting off this deficit.

 

[Genx87]

Originally posted by: slash196
We have a trade deficit because we don't export ANYTHING. EVERYTHING is done overseas now. This contributes not only to the trade deficit, but to the poor state of the domestic economy as well (since we're not producing any good, no one is being paid to produce those goods). Pretty much the only thing we've got going for us is our agricultural capacity, and even that probably won't last, considering the irreparable damage CAFOs and monocultured megafarms are doing to our ecosystem. And it's AMERICAN companies that are profiting off this deficit.

We are either #1 or #2 in export of products in the world.
Where did you get the idea we export nothing?

 

[techs]

If you had told any Republican in say, 1996, that the trade deficit would be so large they would have literally choked and called on impeaching the President and Congress.

 

[BaliBabyDoc]

Originally posted by: Genx87

Originally posted by: slash196
We have a trade deficit because we don't export ANYTHING. EVERYTHING is done overseas now. This contributes not only to the trade deficit, but to the poor state of the domestic economy as well (since we're not producing any good, no one is being paid to produce those goods). Pretty much the only thing we've got going for us is our agricultural capacity, and even that probably won't last, considering the irreparable damage CAFOs and monocultured megafarms are doing to our ecosystem. And it's AMERICAN companies that are profiting off this deficit.

We are either #1 or #2 in export of products in the world.
Where did you get the idea we export nothing?

Let's say the US built cars that people actually want.
Let's say the US increased fuel economy by 50%.
Let's say home and industrial energy efficiency increased by 25%.
Let's say the US started producing super clean biodiesel.
Let's say the US produced textiles that were competitive on the world market.

What would happen to the trade deficit?
What would happen to the economy/GDP?

 

[blackllotus]

Originally posted by: dullard
Studies have shown that the GDP grows in years that the trade deficit grows (ie it shows that we have lots of spare cash to buy foreign stuff).

Correlation is not causation.

Originally posted by: dullard
GDP and the economy does poorly when the trade deficit shrinks (ie we can't afford to buy their stuff).

That makes no sense. A trade deficit occurs when we import more than we export. This is inherently bad for the economy since it means foreign businesses are getting our money instead of domestic businesses.

 

[Genx87]

Originally posted by: BaliBabyDoc

Originally posted by: Genx87

Originally posted by: slash196
We have a trade deficit because we don't export ANYTHING. EVERYTHING is done overseas now. This contributes not only to the trade deficit, but to the poor state of the domestic economy as well (since we're not producing any good, no one is being paid to produce those goods). Pretty much the only thing we've got going for us is our agricultural capacity, and even that probably won't last, considering the irreparable damage CAFOs and monocultured megafarms are doing to our ecosystem. And it's AMERICAN companies that are profiting off this deficit.

We are either #1 or #2 in export of products in the world.
Where did you get the idea we export nothing?

Let's say the US built cars that people actually want.
Let's say the US increased fuel economy by 50%.
Let's say home and industrial energy efficiency increased by 25%.
Let's say the US started producing super clean biodiesel.
Let's say the US produced textiles that were competitive on the world market.

What would happen to the trade deficit?
What would happen to the economy/GDP?

Chances are it would still grow bigger due to importing resources needed to expand the economy.

Besides what does your reply have to do with me stating we are the #1 or #2 exporter in the world. Germany and us trade places every year as the #1 exporter of goods.

 

[Genx87]

Originally posted by: blackllotus

Originally posted by: dullard
Studies have shown that the GDP grows in years that the trade deficit grows (ie it shows that we have lots of spare cash to buy foreign stuff).

Correlation is not causation.

Originally posted by: dullard
GDP and the economy does poorly when the trade deficit shrinks (ie we can't afford to buy their stuff).

That makes no sense. A trade deficit occurs when we import more than we export. This is inherently bad for the economy since it means foreign businesses are getting our money instead of domestic businesses.

I'd read the article Ayabe posted. It is a pretty interesting piece on the effects of trade balances and economic growth.

Mainly that surplus's tend to have a negative effect on economic growth while trade deficits appear to have a positive effect. The primary example in the article was Germany, a country with a trade surplus and a whole half a % increase in economic output.

The inflow of foreign capital to fund our deficit spending is also addressed. It is interesting spin on the situation and makes sense when you look at it. Cheap foreign capital that we turn around and invest back into their economies at a higher rate of return than they recieve on our treasury bonds.

 

[brandonbull]

Originally posted by: Genx87

Originally posted by: slash196
We have a trade deficit because we don't export ANYTHING. EVERYTHING is done overseas now. This contributes not only to the trade deficit, but to the poor state of the domestic economy as well (since we're not producing any good, no one is being paid to produce those goods). Pretty much the only thing we've got going for us is our agricultural capacity, and even that probably won't last, considering the irreparable damage CAFOs and monocultured megafarms are doing to our ecosystem. And it's AMERICAN companies that are profiting off this deficit.

We are either #1 or #2 in export of products in the world.
Where did you get the idea we export nothing?

Oil imports is the biggest factor for a negative trade balance. If I recall correctly, I think services are not valued and the US is a service leader.