Source: "U.S. Trade Deficit Rises to New High; More Risk to Dollar" by Elizabeth Becker - New York Times - 1/13/05
But across Asia and Europe, a wide range of officials and analysts worry that Mr. Bush's economic team may not be up to the challenge of grappling with the issue [of the trade and account deficits.]
While the budget is a domestic document, assessments of whether it will realistically grapple with the underlying problems and whether Mr. Bush has the political will to push tough measures through Congress may determine whether investors around the world stick with the American economy or head for the exits.
The projection is that they keep rising," [added C. Fred Bergsten, director of the Institute for International Economics], noting that the current account deficit is running over 6 percent of the country's gross domestic product. "And it is a trajectory that is bound to crack; people will stop buying dollars, and domestic politics will make the soaring trade deficit with China just unsustainable."
In November [2004], the last month for which there are reliable numbers, foreigners made net purchases of $82 billion, enough to easily pay for the amount by which American imports exceeded exports.
To America's allies, the era in which the world's largest economy also seeks to be the world's economic leader has simply halted. Today the Treasury is regarded as a vastly diminished institution, with comparatively little influence in the White House.
Source: "Dollar's Steep Slide Adding to Tensions U.S. Faces Abroad" - by David E. Sanger, Mark Landler and Keith Bradsher - New York Times - 1/25/05
Source: Economy.com via New York Times - 1/25/05