36% 3.55% 4.17% 4.32% 4.15% 3.82% 2.06% 1.31% 1.97% 2.54% 3.24% 2005 2.97% 3.01% 3.15% 3.51% 2.80% 2.53% 3.17% 3.64% 4.69% 4.35% 3.46% 3.42% 3.39%
Trade deficit
The United States trade balance has been showing deficit since the 1970s, but the rapid growth of trade deficit started in 1997. The highest record of trade deficit was marked last year, as deficit of 2006 was equal to 763.6 billion dollars, which is 6.5% higher than in 2005. Yet, general observations show that negative trade balance has no negative impacts on GDP growth, in fact it had been observed that trade deficit was higher during years with higher GDP growth:
In those years since 1980 in which the current account deficit actually shrank as a share of GDP, real GDP growth averaged 1.9%.
In those years in which the deficit grew modestly, between 0.0 and 0.5%, GDP growth averaged 3.0%.
And in those years in which the current account deficit expanded by more than 0.5% of GDP, real GDP growth grew by an average of 4.1%. (Griswold, 2007)
Though a record trade deficit had been expected, the acceleration in December caught economists by surprise, leading to the revision of growth forecasts. A bigger trade deficit means more U.S. demand for goods and services was satisfied by imports rather than by domestic firms."(Goodman, 2007)
But to the opinion of specialists, trade deficit witnesses that country's currency is strong and that its citizens have possibility to pay for more imported goods at lower prices. That's why during recession year's trade deficit is lower, as citizens didn't consume much of the exported goods due to their high price.
Graph 3.Trade deficit since 1991.
The as-AD model of current U.S. economy
In order to build new classical as-AD model of current U.S. economy we should analyze behavior of prices, GDP and inflation. According to the recent data price indices (Po and P1) and GDP (Qo and Q1) have demonstrated growth. Such as-AD model clearly demonstrates that growth of price indices and growth of GDP leads to the growth of inflation.
Consumer price indices for the U.S. (Source:...
This economic indicator can be used to determine inequality within a given region or area. It can also be view the capacity for individuals within a particular nation to consume b. Rate of Value- $41,560 c. Source of Information- "Per Capita Personal Income U.S. And All States." Per Capita Personal Income U.S. And All States. Bureau of Business & Economic Research, 12 Oct. 12. Web. 02 Feb. 2013. d. Date of information-
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