The Commerce department reported that exports to 2.2% in october. This is from a large decrease in sales from automobile industries and consumer goods. This is not a good time for exports to decrease as many american manufacturers are relying on sales from foreign countires to make up for decreased sales domestically.
The Dollar has currently stregthened agasint other countires, which one may think would be positive, but it has made U.S goods less attractive to forein consumers becasue prices are relatively higher. "There is clear evidence that the falloff in global demand is having a direct impact on top-line revenue growth at multinational corporations," said Steven Ricchiuto.
This may create even larger problems as domestic firms have to decrease production and lower revenues projections. Ultimately this may lead to more layoffs which would be a negative impact on the U.S economy right now.
Domestic demand has decreased as well as U.S consumers have decreased their consumption. This problem with the trade defecit is not going to help get the U.S out of a recession. "The disappointing trade figures may lead to a more significant contraction in economic growth for the final three months of 2008. "Trade is now starting to subtract from GDP, and subtract in a big way," Ricchiuto said
The question is now what do we do to try and resolve this problem?
1 comment:
This example clearly shows how globalisation affects all of us. The crisis started in the US. After that, it began to spread out to other countries. US consumption declined, which hurts other countries who exports to us. Now that they hurt, they won't be able to consume our products as much as they did, which then hit the US. The crisis goes around in one circle and no single country has a clear solution for it yet.
Post a Comment