In comparison, total U.S. household and federal debt was 27 percent larger than GDP at the end of 2000. While the current record debt level is the basis for the debt crisis that now has plunged the United States into a new and possibly severe recession, in recent years it should have served as greatest stimulus to U.S. manufacturing since the need for production to fight and win World War II.
Indicators of the Manufacturing Crisis:
Rather than showing strong gains in employment, capacity, output, and investment that normally would be expected in an economy experiencing the level of consumer stimulus that the United States has seen in recent years, the evidence instead demonstrates that U.S. manufacturing has slumped severely.
Last year, the United States ran a trade deficit of $708.5 billion, including a $498.9 billion deficit in manufacturing goods. The cumulative numbers even are more troubling. Since 1980, the cumulative U.S. trade deficit is $6.365 trillion, with manufacturing goods accounting for $5.249 trillion of that figure.
Of even greater concern, almost 59 percent of that trade deficit in manufactured goods, $3.08 trillion, has been accumulated since 2001. Even the U.S. dollar's 24.2 percent fall against the U.S. Federal Reserve Board's price-adjusted “Broad” Index of world currency values since January 2002, has failed to increase U.S. exports enough to materially stanch the trade red ink.
The United States cannot continue to withstand the problems associated with runaway trade deficit indefinitely. But don't just take AMTAC's word for it, others agree:
• “The present level of the current account deficit is enormous, it is unprecedented and I believe it is unsustainable.”
– Martin Feldstein, Professor of Economics at Harvard University, former Chairman, Reagan Council of Economic Advisors
• “[T]he United States must now attract almost $7 billion of capital from the rest of the world every working day to finance its current account deficit and its own foreign investment outflows.”
– C. Fred Bergsten, Director, Institute for International Economics
• “[O]ur trade deficit has greatly worsened, to the point that our country's "net worth," so to speak, is now being transferred abroad at an alarming rate. A perpetuation of this transfer will lead to major trouble.”
– Warren Buffet, Chairman, Berkshire Hathaway
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American Manufacturing Trade Action Coalition
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