Money Advice Guide

Many are looking at the United State’s current economy and saying what an incredible machine it truly is. It is a resilient Swiss watch and will not stop cruising along. Others say it is such a powerful economy it is like a Category Five Hurricane, which could easily get dangerously out of control and we need to keep a careful eye on it. Is the economy in 2006 going to be the same robust economy of 2006?

Is it going to continue to be what some call a Cat 5 Economy or is it going to be a mere Dust Devil with occasional sector rotations throughout 2006? Currently we see fuel costs up; that is to say heating fuel and gasoline. Some regions natural gas has skyrocketed and this seems to be a season occurrence, which is happening with greater spikes each year. In 2006 we already see signs of gasoline price spikes on the horizon, which is not going to be helpful for consumer spending or auto sales.

We are seeing the advance trickle affect of all those Auto Maker lay-offs through out the economy in regions where these manufacturing jobs will be occurring. The Stock Market was flat in 2005, so much for investing long-term this year, you money would have been better off in the bank, even with interest rates so low.

We see another curious sign and that is Gold and Silver up and other world markets are investing in these precious metals too. One would have to wonder about the health and strength of the US Dollar, as well; too strong or too weak and there will be issues. We see Home sales down and flat in most regions of the United States in the last quarter of 2005 and the simultaneous raising of interest rates, but if they stop raising them no one will want to buy US debt and we are borrowing about 3 billion a day.

The economy seems to be cruising along, yet retail fourth quarter results will be out soon and well they are not looking so pretty and there are issues in the foreseeable future, including a possible war with Iran and Syria and what do you know we are approaching both the Winter Olympics and Mid-Term elections and all this is looking rather similar to past decades with similar issues. Think on this in 2006.

Tags: 2005, 2006, Category Five Economy, economics, Small Dust Devil2005, 2006, Category Five Economy, economics, Small Dust Devil

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Recently the US the current account has reached an unprecedendented level, reaching nearly 6% of GDP. Despite the record levels of deficit many in the US administration have argued that there is nothing to worry about, confident the US will continue to recieve capital inflows to finance the deficit.

In the UK the Balance of Payments on current account has been in persistent deficit for the past 19 years. However compared to the US it is a relatively smaller % of GDP (2.5%)

This essay examines whether economists should be concerned with a current account deficit.

* Current account measures

i) Balance of trade in goods

ii) Balance of trade in services

iii) Net Investment incomes

iv) Net Current Transfer

Tag: economicseconomics

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