The Great China Sale – Peter Morici
From Asia Times:
On Wednesday, the US Commerce Department reported that the 2006 current-account deficit was US$856.7 billion, up from $791.5 billion in 2005 and setting a new record. The deficit was 6.5% of gross domestic product (GDP).
In the fourth quarter, the current-account deficit was $195.8 billion, down from $229.4 billion in the third quarter. The reduction was mostly attributable to lower oil prices during the latter months of 2006, and this situation reversed in the first quarter of 2007.
The current account is the broadest measure of the US trade balance. In addition to trade in goods and services, it includes income received from US investments abroad less payments to foreigners on their investments in the United States. Those net payments turned negative for the first time in many decades, confirming that borrowing to finance huge trade deficits has reduced the world’s largest economy to the status of a debtor nation.[Full Text]