In 2010, the United States’ economy has a current account deficit. Although, the United States’ has not always been in this situation. From the 1980s to around the late 90s, they were in a surplus and were a really strong economy. The current account ranged from 5 billion to 100 billion. But from the start of the new millennium, their current account started to go downhill, all they way to a deficit of 800$ billion in 2006. As one economy experiences deficit, another experiences surplus. This other country is China and when the economy of USA is going into deficit they have become stronger.
When we look at the statistics, 5 to 100$ billion may be huge. Although, the 800$ billion deficit is a 6.4% of their total GDP which is 1.4% of the world’s GDP. In comparison, we can look that around the early 90s, their deficit was close to 0% of their total GDP. We can see that this has taken a huge toll on the economy of the United States to bring it back up, as they don’t have enough foreign reserves to bring them out of this debt. The USA still hugely relies on imports from China and thus not bringing up their profit from exports or local investments into their country.
In a news article by USA Today, reports that from 2007 the USA has improved their deficit down to around 200-100$ billion. Although in the 4th quarter of this calendar year, it seems like the deficit will rise back up to 115$ billion. This was because in 2010, the imports of oil, autos, and other foreign products took a huge toll on the current account and overtook the amount being exported. The news reports that they will not go back to the 2006 scenario of being down in deficit of 800$ but will have a hard time going back up in the calendar year.
Johanne's Economic IB Blog 
This is really interesting Jo! It was surprising that the economy changed from surplus to deficit in such a short amount of time. I would have never guessed that it would change that quickly. Since the USA is at 6.4%, is it the worst in the world? I would not have thought that the USA would have the worst deficit since they have one of the largest economies in the world. But anyways, GOOD JOB!!
[…] In 2010, the United States' economy has a current account deficit. Although, the United States' has not always been in this situation. From the 1980s to around the late 90s, they were in a surplus and were a really strong economy. The current account ranged from 5 billion to 100 billion. But from the start of the new millennium, their current account started to go downhill, all they way to a deficit of 800$ billion in 2006. As one economy experi … Read More […]