"Emerging markets such as China and Latin America will grow faster than their industrialized counterparts"
As China's growth and imports are rapidly increasing, the US will have to bump up its exports this year by 50% to keep the trade gap stabilized. Seeing as this is not feasible with our current resources, the U.S. will absorb more imports, but have less demand for its exports.
Will this have a noticeable drag on our economy?
I think so. Any time a country has a noticeable drop in demand for exports the economy is going to feel it hard. But hopefully the U.S. can find a way to improve technologies and constantly innovate to decrease our gap between imports and exports.
ReplyDeleteThis will definitely have a noticeable drag in our economy if our exports do not increase at all, let alone 50% faster than our imports in the next year. The graph in this article is interesting to look at considering in the early 1990's we were pretty balanced on the imports and exports, but as China started to advance in technology and we started to outsource to these countries... our imports began to increase and the gap started becoming bigger. It seems to have a pattern in the last few years, and the gap continues to get bigger. How could we fix this?
ReplyDeleteI also think it will have a noticeable drag on our economy. The United States has to keep up with China and that can be quite difficult with the financial situation of our economy. It seems like everything I buy now is imported from another country like China and Japan. This might have a bigger effect on our economy in the long run. Will importing more goods have an inverse affect on the job market?
ReplyDeleteGiven consumption function C= C(consumer sentiments) + bY...If our nation's output continues to improve as it is predicted to, consumption will only continue to increase as well. Knowing that a great portion of our consumption stems from 'import' demand, this desire for foreign goods will only rise proportionally.
ReplyDeletePerhaps if our oil production (export) in the US continues to grow, we could offset the trade deficit to some degree. But overall, this is just the nature of how trade has been structured in the US since the 60s. Our trade deficit has only increased in the past decades, as wage gaps influence comparative advantages.
I agree with Brandon that this will have a noticeable negative impact on our economy. Yes, many things are already made in China or Japan, but the US has still been importing some goods to other countries. Importing even fewer goods to other countries will make our trade deficit even larger. This will lead to unemployment in the US, as well as reduced consumption as there is less money to spend. Fewer imports will have a very negative impact on our economy.
ReplyDeleteLike everyone and the article has said, obviously this will place a drag on the economy. As to how much, the article doesn't make it seem like it will be too bad. What policy can be used to fix this though?
ReplyDeleteHow about a high gas tax? Some pros: dependency upon foreign, unstable oil sources would be lessened; it would kick alternative energies into full swing; it would lessen our trade deficit. Some cons: shifted IS--higher interest rates, lower GDP; lower expenditures; higher unemployment.
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