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U.S. Current Account Deficit Discussion

The media and others suggest that the current account deficit run by the U.S. is a problem for the economy.

1. Do you think that the current U.S. deficit is a problem? If so, why so? If not, why not?
2. What action(s) would you advise federal government officials to take on this issue?
3. Define and explain what the Current Account Deficit is.
4. Define and explain what a Current Account Surplus is.
5. When was the last time in the recent past when there was a Current Account Surplus?

Solution Preview

The response addresses the queries posted in 976 words with references.

//U.S. is one of the leading nations in the world. Despite the fact, there are many problems faced by the U.S. economy. The current U.S. deficit is one of the major problems faced by the economy. But, the U.S. government and U.S. agencies have taken steps to tackle the issues related to the current deficit faced by the U.S. economy. In order to make a good understanding of US deficit and current account deficit, we will focus on defining the current US deficit and remedies taken to handle it//.

The current account balance or balance of payment in US for years 2008 to 2012 was a deficit i.e. US $ -474,970,000,000. The Current Account deficit in the United States was 106145 US $ Million in the starting of the year 2013. The Bureau of Economic Analysis is responsible for estimating the Current Account in the United States (I.M.F., 2004). From 1960 to 2013, the current account showed an average of -43449.53 USD Million, recorded the highest in February 1991 of 9957 USD Million and the lowest in August 2006 of -214397 USD Million. The Current Account is defined as the sum of the balance of trade i.e. exports minus imports of goods and services, net factor income which includes interest and dividends and at last, net transfer payments referring to the foreign support.

The shortfalls in balance of payment show that the largest economy of the world is dependent on the overseas investors for their funding. Growth in the U.S. remains quite decent and will gradually lead to increase the ...

Solution Summary

The solution discusses the U.S. current account deficit.

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