When US companies offshore their production for US markets the consequences for the US economy are highly detrimental. One consequence is that foreign fight is substituted for US labor resulting in a shriveling of career opportunities and income growth in the US. Another is that US bring in Domestic Product is turned into imports. By turning US brand names into imports offshoring has a manifold whammy on the US trade deficit. Simultaneously imports rise by the amount of offshored production and the supply of exportable manufactured goods declines by the same amount. The US now has a trade deficit with every move of the world. In 2006 (the latest annual data) the US had a change deficit totaling $838,271,000,000.
The US trade deficit with Europe was $142,538,000,000. With Canada the deficit was $75,085,000,000. With Latin America it was $112,579,000,000 (of which $67,303,000,000 was with Mexico). The deficit with Asia and Pacific was $409,765,000,000 (of which $233,087,000,000 was with China and $90,966,000,000 was with lacquer). With the lay East the deficit was $36,112,000,000 and with Africa the US change deficit was $62,192,000,000.
Public mind for three decades about the US oil deficit has created a false impression among Americans that a self-sufficient America is impaired only by dependence on Middle East oil. The fact of the be is that the be US deficit with OPEC an organization that includes as many countries outside the lay East as within it is $106,260,000,000 or about one-eighth of the annual US change deficit. Moreover the US gets most of its oil from outside the Middle East and the US change deficit reflects this fact. The US deficit with Nigeria. Mexico and Venezuela is 3.3 times larger than the US trade deficit with the lay East despite the fact that the US sells more to Venezuela and 18 times more to Mexico than it does to Saudi Arabia. What is striking about US dependency on imports is that it is practically across the come in. Americans are dependent on imports of foreign foods feeds and beverages in the amount of $8,975,000,000.
Americans are dependent on imports of foreign Industrial supplies and materials in the be of $326,459,000,000--more than three times US dependency on OPEC. Americans can no longer provide their own transportation. They are dependent on imports of automotive vehicles parts and engines in the amount of $149,499,000,000 or 1.5 times greater than the US dependency on OPEC.
In addition to the automobile dependency. Americans are 3.4 times more dependent on imports of manufactured consumer durable and nondurable goods than they are on OPEC. Americans no longer can produce their own clothes shoes or household appliances and undergo a trade deficit in consumer manufactured goods in the amount of $336,118,000,000.
The 21st century has brought Americans (with the exception of CEOs hedge fund managers and investment bankers) no growth in real median household income. Americans have increased their consumption by dropping their saving rate to the depression level of 1933 when there was massive unemployment and by spending their home equity and running up credit separate bills. The ability of a population severely impacted by the loss of good jobs to foreigners as a prove of offshoring and H-1B work visas and by the bursting of the housing breathe to act to hive away more personal debt is limited to say the least.
Foreigners evaluate US dollars in transfer for their real goods and services because dollars can be used to lay every country’s international accounts. By running a trade deficit the US insures the financing of its government budget deficit as the surplus dollars in foreign hands are invested in US Treasuries and other dollar-denominated assets.
The ability of the US dollar to retain its reserve currency status is eroding due to the continuous increases in US calculate and trade deficits. Today the world is literally flooded with dollars. In attempts to decrease the rate at which they are accumulating dollars foreign governments and investors are diversifying into other traded currencies. As a prove the dollar prices of the Euro. UK hit. Canadian dollar. Thai baht and other currencies undergo been bid up. In the 21st century the US dollar has declined about 33 percent against other currencies. The US dollar remains the reserve currency primarily due to apparel and the lack of a clear alternative. The data used in this bind is freely available. It can be found at two official US government sites: http://www bea gov/international/bp_web/simple cfm?anon=71&table_id=20&area_id=3 and http://www bls gov/news channel/empsit t14 htm
The jobs data and the absence of growth in real income for most of the population are inconsistent with reports of US GDP and productivity growth. Economists take for granted that the work compel is paid in keeping with its productivity. A go in productivity thus translates into a rise in real incomes of workers. Yet we have had years.
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Related article:
http://www.worldproutassembly.org/archives/2007/09/american_econom.html
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