US Trade and Budget Deficits
This New York Times graph depicts the US trade balance from 1930 to 2005, with the size of the surplus or deficit shown as a percentage of GDP.
These charts illustrate the unprecedented level of income of the "hyper-rich" and how they continue to benefit from tax cuts. While this 0.01% of taxpayers represents just 145,000 people, all of the US is living as if it is "hyper-rich," turning to debt to pay for lifestyles that their current incomes don't support. Similar to the 1920's, wages cannot keep up with living costs. When will this bubble pop, and who will lose out when it does? (New York Times)
The US current account balance turned severely negative for the first time during the Reagan administration in the 1980s. Following a brief period of stabilization in the late 1980s and early 1990s, the deficit has again continuously increased since 1995. In 2006, it soared to an unprecedented $800 billion.
Since 1976, the value of US imports has exceeded the value of exports every single year. The situation remained mostly under control until the mid-1990s, when imports began to skyrocket as a result of trade liberalization and globalization, creating a record-high trade deficit of $758 billion in 2006. The ballooning deficit contributes to the increasing national debt and the weakening of the US dollar in the international currency market.
Foreign investments in the US have grown rapidly while US investments abroad have failed to keep pace, leaving the US with an increasingly heavy net burden of liabilities.
The US government budget deficit has grown rapidly, after swinging briefly into surplus in 2000 and 2001. The deficit reflects increased US military spending and reduced government revenue due to tax cuts. The red ink in Washington adds to the instability of the dollar, making foreign dollar-holders nervous about the future strength of the currency and the future value of dollar-denominated US assets.
As the US federal government plunges into deeper debt, state and local governments across the country are facing their own budget crises and sharply rising debt levels.
US households borrow heavily to finance spending on homes as well as consumer products and services. The indebtedness keeps rising, adding another element to the shaky fundamentals of the US economy.