U.S. Account Deficits
Since 1989, the current account deficit of the US has been increasingly large, reaching close to 7% of the GDP in 2006. In 2011, it was the highest deficit in the world. New evidences, however, suggest that the U.S. current account deficits are being mitigated by positive valuation effects. That is, the U.S. assets overseas are gaining in value relative to the domestic assets held by foreign investors. The U.S. net foreign assets therefore is not deteriorating one to one with the current account deficits. The most recent experience has reversed this positive valuation effect, however, with the US net foreign asset position deteriorating by more than two trillion dollars in 2008. This was due primarily to the relative under-performance of domestic ownership of foreign assets (largely foreign equities) to foreign ownership of domestic assets (largely US treasuries and bonds).
Read more about this topic: Current Account
Famous quotes containing the words account and/or deficits:
“I still feel just as I told you, that I shall come safely out of this war. I felt so the other day when danger was near. I certainly enjoyed the excitement of fighting our way out of Giles to the Narrows as much as any excitement I ever experienced. I had a good deal of anxiety the first hour or two on account of my command, but not a particle on my own account. After that, and after I saw that we were getting on well, it was really jolly. We all joked and laughed and cheered constantly.”
—Rutherford Birchard Hayes (1822–1893)
“Don’t forget what I discovered—that over ninety percent of all national deficits from 1921 to 1939 were caused by payments for past, present, and future wars.”
—Franklin D. Roosevelt (1882–1945)