Thank you all for coming. Today, I would like to formally announce, with conclusive analysis conducted by Willie Green supporting me, that the sky is most definitely falling. I'll take a few quetions...
Gross Domestic Product (GDP), the measure of the USA's output of goods and services, is calculated by the Commerce Department's Bureau of Economic Analysis using the following items:
The BEA News Release for FOURTH QUARTER 2004 provides us with the following current data for these items. (Seasonally adjusted at annual rates)
Gross domestic product (GDP)............................. $11,728.0 billion Personal consumption expenditures.......................... 8,231.1 (70.18% of GDP) Gross private domestic investment.......................... 1,922.4 (16.39% of GDP) Net exports of goods and services........................... -609.3 (-5.19% of GDP) Government consumption expenditures and gross investment... 2,183.8 (18.62% of GDP)
The current BALANCE OF TRADE is in deficit, which is considered unfavorable.
And at historic highs, it diminishes our domestic economy by over 5% - more than twice the normal variation. This is NOT insignificant.
Does anyone know the last time we didn't have a trade deficit?
Lol, Willie Green is at it again. You need to learn basic economics Willie.
ping
Willie... please pick up an economics textbook. The imbalance of trade is accounted for in the other parts of the GDP equation, it's not a dead-weight loss to GDP as you claim here.
I heard the same crap when Reagan was President.
We have imports going through the roof but still nobody would consider putting any tariffs on these products. Even a measly one or two percent tariff on selected goods would bring in billions to the Federal Treasury. Let's make some money on this trade deficit!!
Thank you all for coming. Today, I would like to formally announce, with conclusive analysis conducted by Willie Green supporting me, that the sky is most definitely falling. I'll take a few quetions...
A whole bunch of hucksters are making a load of money off of our "free trade" policies with mercantilist China, and you do not need to come here and upset their apple cart.
its why we barely can hold GDP growth in the low 3% range, while China is running 8-9%.
we must somehow force china to float its currency.
We're doomed!!!
Like I've said before, there is a serious lack of economics education in this country, even among conservatives. Go take a Econ 101 class at your local friendly neighborhood community college.
/sarcasm too?
You still have not addressed your misstatement on GDP. Do you understand the parts of the GDP equation? The trade balance is accounted for in the rest of the equation, do you understand this? If so, why did you imply otherwise?
From: http://www.state.gov/r/pa/ho/time/id/17606.htm
Smoot-Hawley Tariff
The Smoot-Hawley Tariff Act of June 1930 raised U.S. tariffs to historically high levels. The original intention behind the legislation was to increase the protection afforded domestic farmers against foreign agricultural imports.
Massive expansion in the agricultural production sector outside of Europe during World War I led, with the postwar recovery of European producers, to massive agricultural overproduction during the 1920s. This in turn led to declining farm prices during the second half of the decade.
During the 1928 election campaign, Republican Presidential candidate Herbert Hoover pledged to help the beleaguered farmer by, among other things, raising tariff levels on agricultural products.
But once the tariff schedule revision process got started, it proved impossible to stop. Calls for increased protection flooded in from industrial sector special interest groups and soon a bill meant to provide relief for farmers became a means to raise tariffs in all sectors of the economy. When the dust had settled, Congress had agreed to tariff levels that exceeded the already high rates established by the 1922 Fordney-McCumber Act and represented among the most protectionist tariffs in U.S. history.
The Smoot-Hawley Tariff was more a consequence of the onset of the Great Depression than an initial cause. But while the tariff might not have caused the Depression, it certainly did not make it any better. It provoked a storm of foreign retaliatory measures and came to stand as a symbol of the ‘beggar-thy-neighbor’ policies (policies designed to improve one’s own lot at the expense of that of others) of the 1930s.
Such policies contributed to a drastic decline in international trade. For example, U.S. imports from Europe declined from a 1929 high of $1,334 million to just $390 million in 1932, while U.S. exports to Europe fell from $2,341 million in 1929 to $784 million in 1932. Overall, world trade declined by some 66% between 1929 and 1934.
More generally, Smoot-Hawley did nothing to foster trust and cooperation among nations in either the political or economic realm during a perilous era in international relations. The Smoot-Hawley tariff represents the high-water mark of U.S. protectionism in the twentieth century. Thereafter, beginning with the 1934 Reciprocal Trade Agreements Act, American commercial policy generally emphasized trade liberalization over protectionism. The United States generally assumed the mantle of champion of freer international trade, as evidenced by its support for the General Agreement on Tariffs and Trade (GATT), the North American Free Trade Agreement (NAFTA), and the World Trade Organization (WTO).
Additional Reading: Barry Eichengreen, “The Political Economy of the Smoot-Hawley Tariff,” Research in Economic History, 12 (1989), pp. 1-43. Douglas A. Irwin, “From Smoot-Hawley to Reciprocal Trade Agreements: Changing the Course of U.S. Trade Policy in the 1930s,” in Michael D. Bordo, Claudia Goldin, and Eugene N. White, Editors, The Defining Moment: The Great Depression and the American Economy in the Twentieth Century (Chicago: University of Chicago Press, 1998). Charles P. Kindleberger, The World in Depression, 1929-1939 (Berkeley and Los Angeles: University of California Press, 1973). Peter Temin, Lessons from the Great Depression: The Lionel Robbins Lectures for 1989 (Cambridge, Massachusetts: MIT Press, 1989).
Somehow, after reading the title of the thread, I knew it was posted by Willie.
Didn't even have to click on it.
I guess there is something to be said for consistency...
What has the trade deficit been as a percent of GDP over the past 30 years?
We are piling on debt at unsustainable rate:
The good news from the trade situation is that our overall exports of goods also set a record last year in dollar value.
Our exports of capital goods, while not quite at record levels, are also picking up.
Employment, while it is not at 2000 levels, at least is also on an upward trend and we may be able to break those record levels even this year; however, there's not much chance that we will actually have caught up in terms of the participation rate of employed persons to the whole population.
But the amount of debt we are creating is a lead weight on our system. Our international investment position was at -$2.6 trillion dollars as of last year's report, and I suspect that it will be far worse this year.
The Chinese economy has nowhere else to go but up. They were nothing since the end of WWII and it should have been expected that it evenually develops. I'd say the same applies to India and Brazil. Our biggest problem is that our politics keep us from really taking advantage of the action. The Eu could care less about the moral aspects getting in the way of trade.
Sooner or latter I'd say the chinese economy will get a taste of some of the same problems we are facing.