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Economic Analysis

On the other side of the coin, the fact that these foreign markets, like Japan, are experiencing economic trouble at home makes them even more desirous of exporting goods and services to the lucrative American market. The biggest problem with a trade deficit for America is that as exports continue to decline so does economic growth. A trade deficit equates to a brake on U.S. economic growth, which more than likely can’t begin to grow unless the trade deficit changes-an unlikely scenario until economic crises in key international markets (like Asia) begin to improve.

However, many economic indicators like the trade deficit are not always equitable with bad news. This article contends that the trade deficit is actually a good thing for America and the international economy, at least to a degree. This is because if the countries who are sending large amounts of exports to the U.S. did not have America’s lucrative markets to supply their economic situation would deteriorate even more, perhaps creating an international economic banking collapse, “China’s inability to divert some of those lost exports to the U.S. market would surely exacerbate its banking crisis, forcing a banking collapse at worst or a currency devaluation at best. The resulting collateral damage to the Pacific region and to the world’s financial system would be utterly unacceptable” (The Con

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Economic Analysis. (1969, December 31). In LotsofEssays.com. Retrieved 22:18, October 22, 2014, from http://www.collegetermpapers.com/viewpaper/161.html
 
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