Economic Analysis : Forecasting The Health Of Economy Is Foreign Trade

The current state of the U.S. macro economy is made up of a plethora of highly involved processes. I am going to attempt to explain some simple terms and concepts focused on international trade and foreign exchange rates.

The U.S main trade allies are Canada, Mexico, China, Japan, Germany, South Korea, and France combing for a total of 180 billion dollars earned. But not only do we earn money by exporting, we spend money importing the U.S spent 388 billion dollars on imported oil. “We aren't addicted to oil, but our cars are”.James Woolsey..On other products such as forest products, cars, food, and footwear we spend about 124 billion dollars from china which is the most from a country. In 2013, the total U.S. trade deficit was $476.692 billion. This is because the imports of $2.76 trillion exceed its exports of $2.28 trillion (Amadeo, Kimberly). This also shows the economy is strengthening, because of the deficit is lower than in 2012, when it was $537.6 billion. Another big cause to the trade deficit is consumer products. The largest products are drugs, consumer electronics, clothing, household goods, and furniture. Vehicle and mechanical products are another category where the U.S. ran a trade deficit in 2013. They imported $294 billion worth of cars, trucks and auto parts, while only exporting $146 billion, causing a huge deficit of $148 billion (Amadeo,

Foreign exchange rates and International trade are important aspects of economics. The United States macroeconomy’s health is determined by these concepts and their factors.

In this paper, you will read about the current standing of the U.S. economy as of spring and summer for 2015. Gross Domestic Product (GDP), unemployment rate, inflation rate, foreign trade, consumer spending, business investment, and government spending will all be analyzed. This analysis will then lead to the projection of the U.S. economy for the first two quarters of 2016.

For the past three decades the U.S. trade deficit with China has been growing. In 2013 U.S. trade with China was $562 billion, but resulted in a trade deficit of $319 billion. Nader states that the

According to records maintained by the U.S Census Bureau and the BEA, exports in April of $193.3 billion and imports of $240.6 billion resulted in a trade deficit of $47.2 billion, up from $44.2 billion in March. The April exports were $0.3 billion less than March exports of $193.7 billion, but

Trade deficit refers to the situation when the value of imports exceeds the value of exports. This is synonymous to 'surplus' when the nation has a surplus of imported goods. The whole affects the income of the USA during that given period hence affecting the national debt. This, in turn, has a dribbling down effect on all related factors as explained in the following essay.

In a recently released report entitled GDP Declines Slightly in Fourth Quarter, the United States Department of Commerce and the Bureau of Economic Analysis (BEA) examine recent data trends to provide a detailed advance estimate of the nation's gross domestic product (GDP). A pair of informative graphs is also included within this comprehensive review, with the first illustrating the quarterly growth in real GDP since 2009, and the second depicting annual real GDP growth over the same period of time. Released on January 30th, 2013, the BEA's most recent GDP forecast concludes that real GDP decreased by a rate of 0.1 percent during the fourth quarter of 2012, after a relatively encouraging increase of 3.1 percent during the preceding quarter (Bureau of Economic Analysis, 2013). Among the notable economic trends observed by the BEA in its latest report is a downturn in inventory investment by manufacturing industries, as major retailers struggle to cope with dampened consumer confidence during the prolonged recession (2013) The BEA also finds that government spending was curtailed dramatically, reflecting the Obama administration's commitment to reduce superfluous funding for the defense department.

Exports gains were significant for crude oil and natural gas and consumer goods led by food and beverages, appliances and cleaning products and pharmaceutical p roducts which in total, have been rising more than imports, but still lower than imports. Regionally, exports to the United States led to the gains for goods exports, which helped raise demand for Canadian products in that country as it increased by $19.1billion. Also, US takes up 75.8% of their overall trade while the European Union was the only major trading partner to which Canada’s exports fell last year.

The United States had $918 billion in total (two ways) goods trade with NAFTA countries (Canada and Mexico) during 2010. Goods exports totaled $412 billion; goods imports totaled $506 billion. The US goods trade deficit with NAFTA was $95 billion in 2010.

Initially a trade deficit is not necessarily bad as it raises the standards of living for consumers as they have access to a variety of items at better prices. Over time and if the trade deficit continues to grow the number of jobs may decrease as businesses go overseas to produce products at lower costs. In an extreme example, if we continue to import everything eventually nothing will be produced in the United States resulting in many individuals unemployed. One other area that could potentially cause issues for the United States is that fact that most of our trade debt is with China. If something occurs with the relationship with China that could potentially have a very negative affect. Another possibility is that our currency could crash, while many may think it is not possible hyperinflation could cause the value of the dollar to decrease

The U.S. trade deficit has risen more or less steadily since 1992. In the second quarter of 2004, the trade deficit relative to GDP surpassed the 5 percent mark for the first time. Many economists already considered trade deficits above 4 percent of GDP dangerously high. The fear is that continued growth in this external imbalance of the U.S. economy will ultimately spook overseas investors. http://www.americanprogress.org/issues/2004/09/b193700.html

Bureau of Economic Analysis (BEA). (http://www.bea.gov/). Rating = 5. The BEA website contains a list of economic accounts grouped by the national, international, and regional categories, as well as papers on topics of interest written by subject matter experts and a one stop shop for accessing BEA data. Its application makes the data easier to print, save, export and share via social tools, with charting features that are robust and visually appealing. The national and regional accounts include Gross domestic product (GDP) and personal income, while the international accounts include U.S. trade in goods and services and Balance of Payments.

In order to prevent the current crisis from deepening, immediate actions are required from the major industrial countries and from the international community. There is evidence that the world economy is experiencing a major slowdown, which may deepen if inadequately managed. For example, Japan is in its worst recession since the war, much of East and South-East Asia is in depression, Russia is experiencing a major downturn, growth has stalled in Latin America, and the prices of primary commodities and a number of manufactures are falling in international markets. Authorities in the industrial countries must nonetheless continue to be alert. Several downside risks still remain, and current policies may prove insufficient to prevent the world economy from slipping into recession. Expansionary fiscal policies may be required in other industrial economies, in addition to Japan. It is also crucial that the rules of an open international trading system should operate smoothly, allowing the economies that face adjustment to reduce their deficits or generate trade surpluses with the more vigorous industrial economies.

Nowadays, the international trade is very important for a growth economy, specially with advanced technologies that facilitate communication. To obtain financial and technological resources for economic growth, the nation needs certainly to participate in world trade. International trade of developing countries leads to high growth and significant changes in the commodity structure by reflecting changes in the economy. The countries in all over the world are economically interdependent. No any nation can exist in economic isolation. If the economy of one nation crashed, other nations in the world will probably be unstable as well. And that would be worse if that nation among to developed nations.