Opinion: Theres nothing strong about U.S. economic fundamentals
MarketWatch
By Stephen S. Roach
Published: Feb 27, 2018 8:54 a.m
...its not just the governments red ink that is so troublesome. The personal saving rate fell to 2.4% of disposable (after-tax) income in December 2017, the lowest in 12 years and only about a quarter of the 9.3% average that prevailed over the final three decades of the 20th century.
As domestic saving plunges, the U.S. has two options a reduction in investment and the economic growth it supports, or increased borrowing of surplus saving from abroad...
With these deficits, of course, come equally chronic trade deficits with a broad cross-section of Americas foreign partners. Astonishingly, in 2017, the U.S. ran trade deficits with 102 countries.
The multilateral foreign-trade deficits of a saving-short U.S. economy set the stage for perhaps the most egregious policy blunder being committed by the Trump administration: a shift toward protectionism. Further compression of an already-weak domestic saving position spells growing current-account and trade deficits a fundamental axiom of macroeconomics that the U.S. never seems to appreciate.
Attempting to solve a multilateral imbalance with bilateral tariffs directed mainly at China, such as those just imposed on solar panels and washing machines in January, doesnt add up. And, given the growing likelihood of additional trade barriers as suggested by the Commerce Departments recent recommendations of high tariffs on aluminum and steel the combination of protectionism and ever-widening trade imbalances becomes all the more problematic for a U.S. economy set to become even more dependent on foreign capital.
Far from sound, the fundamentals of a saving-short U.S. economy look shakier than ever.
https://www.marketwatch.com/story/theres-nothing-strong-about-us-economic-fundamentals-2018-02-26
pangaia
(24,324 posts)It looks like a house from far away but get up close, or have a little wind and poof.. it's gone.
bronxiteforever
(9,287 posts)stuffmatters
(2,574 posts)How is it possible that such an undereducated,reality denier is able to set the policy and budgets that effect (and harm) so many hundreds of millions of Americans. Ryan and the Repugs fantasy based,Randian "budget by spreadsheet" reigns supreme; Ryan's lack of both respectable economic education and intellectual aptitude have never questioned by the Repugs or even,more disgraceful,by the MSM.