ABA Banking Journal - September 2011 - (Page 12)

the economy | by joe quinlan Revisiting what’s right with America The S&P downgrade was largely triggered by politics, not economics. In S&P’s own words, the move reflected the weakened “effectiveness, stability, and predictability” of U.S. policymaking. Politics and policies matter. But that said, let’s not lose sight of America’s underlying economic strengths... The U.S. is the largest and most productive economy in the world. With just 4.6% of the 1. global population, the U.S. accounts for roughly 25% of global GDP and produces just as much output in a year (about $14.6 trillion) as the next three largest economies— Japan, China and Germany—combined, according to the International Monetary Fund (IMF). In dollar terms, America’s economy is nearly three times the size of China’s, and light years ahead of the mainland in terms of per capita income. The U.S. remains a global leader in manuf a c t u r e d goods. Con- relatively steady over the past three decades. U.S. manufacturing output exceeded that of Japan and Germany combined in 2009. China ranked number one with a global share of 21.2% in 2009, although the figure requires two footnotes: First, figures for China include output for mining, utilities and manufacturing and are therefore overstated. Second, a significant share of China’s manufacturing output is derived from foreign affiliates—the latter still account for over 50% of China’s total exports. The U.S. is the largest exporte r o f g o ods and services in the world. rently exports in one month ($175 billion in May 2011) is greater than what most other countries (over 170 nations) export in one year. The U.S. remains t h e wo r l d ’s favorite dest i n at i o n f o r foreign direct investment (FDI). Despite the chatter about U.S. 4. 2. 3. trary to popular media reports, the U.S. is still in the business of making “stuff.” Indeed, the U.S. is a manufacturing powerhouse—ranked second only to China, who grabbed the top spot in 2008 from the U.S. America’s share of global manufacturing output was 18.4% in 2009 (the latest year of United Nations’ available data), down from 23% in 1990 and roughly 20% in 1980. In other words, America’s share of world manufacturing output has remained 12  |  ABA BANKING JOURNAL  |  September 2011 The U.S. has posted a trade deficit in goods every year since 1975, a notorious economic feat. However, the deficit masks the fact that the U.S. is a significant exporter of both goods and services. When goods and services are combined, America emerges as the world’s top exporter, with combined exports totaling $1.8 trillion in 2010, or over 9% of total global trade, according to the World Trade Organization (WTO). America is rarely thought of as an exporting powerhouse, but what the U.S. cur- outsourcing and jobs being shipped to China, there is this simple truth: The U.S. remains the most attractive market in the world for foreign investors. Why? The allure of the U.S. comes from many factors, including its vast and wealthy market, large skilled labor pool, and transparent rule of law. FDI inflows to the U.S. totaled roughly $2 trillion between 2000 and 2010, according to the United Nations Conference on Trade and Development—the comparable figure for China was $792 billion, or just 40% of America’s total. America’s share of global inward FDI was the economy cONtINUed ON p. 14 Joseph Quinlan is managing director, chief market strategist, U.S.Trust, Bank of America PrivateWealth Management

Table of Contents for the Digital Edition of ABA Banking Journal - September 2011

ABA Banking Journal - September 2011
Contents
Chairman’s View
Editor’s Column
The Economy
Bank Notes
ABA Community Banking
Pass the Aspirin
Tech Topics
Cover Story: Mobile money at stake
Insurance revival
The long and short of annuities
Compliance Inbox
ABA Resources
ABA Annual Convention
First Person

ABA Banking Journal - September 2011

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