Dark Matter Disappears
In Q405 the U.S. trade deficit grew to $225 billion . An increase of 21% from the $185 billion deficit in Q305. The deficit for all of 2005: $805 billion, a new record. Trade deficit with OPEC $92 Billion; with China $202 Billion.
The current account deficit increased in Q4 to 7% of GDP. For all of 2005, the deficit was 6.4% of GDP. Over 20 years ago in 1985, the current account deficit was half or 3.5% of GDP.
For 2005: income flowing into the U.S. came to $466 billion, up 24% from 2004. U.S. owned assets overseas increased by $492 billion, while foreign owned assets in the U.S. increased by $1.29 trillion.
In Q405, the income flow turned into a deficit. We sent $2.4 billion more in income overseas than we received vs. a Q305 $4.9 billion income surplus in our favor.
This was only the 2nd time since records have been kept, that income flow from investments has been in deficit for the United States.
To put this into context, in 2004, the surplus was over $30 billion. From 1980 to 1985, the annual average surplus was above $30 billion, and from 1980 to 2004, the smallest annual surplus was $4.3 billion in 1998.
Higher interest rates would force U.S. consumers have to spend less and save more. But will the central banks allow for such a painful scenario??
For all the boats in a global economy to rise, those already at a higher level must come down. Bottom line: to service and reduce our deficits, we are looking at a reduction in our standard of living.
We've used borrowed money to live beyond our means. The dance has been nice but its time to pay the piper.
The current account deficit increased in Q4 to 7% of GDP. For all of 2005, the deficit was 6.4% of GDP. Over 20 years ago in 1985, the current account deficit was half or 3.5% of GDP.
For 2005: income flowing into the U.S. came to $466 billion, up 24% from 2004. U.S. owned assets overseas increased by $492 billion, while foreign owned assets in the U.S. increased by $1.29 trillion.
In Q405, the income flow turned into a deficit. We sent $2.4 billion more in income overseas than we received vs. a Q305 $4.9 billion income surplus in our favor.
This was only the 2nd time since records have been kept, that income flow from investments has been in deficit for the United States.
To put this into context, in 2004, the surplus was over $30 billion. From 1980 to 1985, the annual average surplus was above $30 billion, and from 1980 to 2004, the smallest annual surplus was $4.3 billion in 1998.
Higher interest rates would force U.S. consumers have to spend less and save more. But will the central banks allow for such a painful scenario??
For all the boats in a global economy to rise, those already at a higher level must come down. Bottom line: to service and reduce our deficits, we are looking at a reduction in our standard of living.
We've used borrowed money to live beyond our means. The dance has been nice but its time to pay the piper.
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