Does the US consume waaay more than it produces?

Question

I have heard this is a main reason for the weakening economy. I am no economic expert. Can you elaborate? What are the solutions?

Answer 1

No, the US economy does not "consume way more than it produces". We do, however, import way more than we export (reflected by a negative current account balance). It's difficult to compete with cheap, foreign commodities producers, especially when they pin their exchange rates artifically low. So, for the time being (and the foreseeable future), we'll continue to import more than we export.

Now, that's not great news, but it's certainly not damning. Effectively, we're fueling the rest of the world's developing economies by buying their goods. As these economies develop, markets for our new, innovative products (and perhaps more importantly, services) begin to emerge. In a truly global economy, nations grow increasingly interdependent--imports and exports will flow as the market dictates, financial capital will flow around the world (look at all of the foreign investment into the US), ideas and innovation will spread.

Is our economy "weakening", in fact? Well, maybe--that's tough to tell. But we have to remember the cyclical nature of economic growth/output. We won't always be firing on all cylinders. Sometimes things might slow down a bit. By most standards, though, we're doing quite well for ourselves. Our GDP is still staggering. Our employment rates are perfectly acceptable.

Something to consider--does the US need to be the #1 economy in the world? I would contest that no, it doesn't. In the face of growing competition, we might begin to lose some of our market share (think China/India in the next 50 years). That's not tragic--it's how markets work. Competition is good for everyone, even though necessarily there will be winners and losers.

Solutions, you ask? A liberal (ideological, not political) economist would insist upon deregulation and lack of government intervention. More importantly (and this is something that rings true to me personally), responsible government fiscal policy. A reasonable budget should be a major concern. There's no need to waste money--especially when it can be invested in health/education. In the future, another big issue could be energy independence. You lose a lot of power when you're dependent on someone else for necessities (in this case, petroleum and petrol-based products). In some ways, our unbalanced trade could be spun as overdependency--but that's what happens when you globalize--global actors become more and more interdependent.

Well, that was a long, rambling rant. Something to think about, though. It's good to see someone considering the long-term economic health of our country, given the tremendous implications.

Answer 2

NO... We actually have WAY to much food which is why we also help other countries in need of it.

We produce soooooo much grains that the majority of it simply goes to feeding animals. We can not consume the great amounts of our productions. Life is good.

Answer 3

yes, we import most things and export few in comparison.
also we are paying 20% (hundreds of billions) of our yearly tax revenue on paying interest off loans taken against other countries. the cause isnt so much economic as it is political. We reduce taxes to get politicians elected and borrow more to make up for the deficit.

Answer 4

Define "waaay".

The U.S. is consuming more than it produces, as clearly indicated by our trade deficit, which ran $58.4 billion in February.

If "waaay"<=$58.4 billion, then yes.
If "waaay">$58.4 billion, then no.

However, the economy is not weakening. Check the link.

Answer 5

No. And the economy is quite strong. Look at the data.

Answer 6

No "lacking hyperlink." Jesus is how to God and from us! The Web hyperlink is the brain and middle. God is aware of what to do with it. Believe it or now not, God is aware of even earlier than you do what you are going to mention/request! Nothing's inconceivable with God.