Major Macroeconomic Issues
The purpose of this segment is to point out the major weak spots in the U.S. economy. These weak points accentuate the market share loss problem because foreign competitors take advantage of the U.S. weaknesses in penetrating its markets.
The two main problems -- the federal deficit and trade deficits -- are slowing the economy. If present trends continue, the growth of the U.S. industrial juggernaut could be seriously hampered. In 1988, this is what two experts had to say about the state of the economy:
By any reasonable measure, the United States is growing poorer compared with many of its most potent competitors. While this reality can be cloaked in deficits and major devaluations, such devices cannot mask forever the fact that there has been and continues to be a full scale transfer of wealth from the United States to many other parts of the world. Indeed, these disguises only make the specter of the future more disturbing. ( Levitt and Stewart 1988, p. 272)
Often a country's problems provide opportunities for others to exploit. The following sections list highlights of the economy's most pressing problems. The advantages of being debt free outweigh the disadvantages ( Schuller and Dunn 1985).
Since 1970, the United States has had a trade surplus only three times. Imports have been consistently on the rise, causing chronic trade deficits. Therefore, the most frequently cited symptom of declining U.S. competitiveness is the U.S. trade deficits ( McCullough 1985). Furthermore, these deficits are the most visible manifestations of a much deeper set of U.S. economic problems: budget deficits, lagging productivity growth, low savings rates, and the lack of a well thoughtout foreign trade policy.
The five countries with the largest deficits in 1988 were Japan, $52 billion; Taiwan, $13 billion; West Germany, $12 billion; Canada, $11 billion; and South Korea, $9 billion ( U.S. Foreign Trade Highlights 1988, p. 62). Japan alone had an