Is the large U.S. current account deficit sustainable?
Author InfoJill A. Holman Abstract The U.S. current account deficit has grown steadily since 1991, hitting record levels of 3.6 percent of GDP in 1999 and 4.4 percent in 2000. In recent years, the growing deficits have increasingly raised concerns. For instance, most economists who took part in a recent Wall Street Journal forecasting survey agreed that the current account deficit is the major threat facing the U.S. economy. Some policymakers have also suggested that the large and growing U.S. current account deficit may be unsustainable and thus may create problems for the economy.> Holman examines the causes and consequences of the large current account deficits in the United States. She identifies the potential sources of the large deficits. Much of the rise in the current account deficit over the past decade can be attributed to two factors: accelerating U.S. productivity and a surge in household wealth driven by the stock market. She then examines whether the U.S. current account
