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Updated: June 10, 2025
Morgan Stanley predict an alarming shortfall of 6 percent of GDP by the end of next year. The US is already the world's largest debtor having been its largest creditor only two decades ago. Such a disorientating swing has been experienced only by Britain following the Great War.
This did little to dent the country's burgeoning current account deficit, now at over 5 percent of GDP. Unemployment in January broke through the psychologically crucial barrier of 10 percent of the workforce. In some regions every fifth laborer is laid off. There are more than 13 and in the worst hit parts, more than 100 applicants per every position open .
Even allowing for price differentials, the one-month cost of treatment of Tuberculosis in Tanzania was the equivalent of 500 working hours compared to 1.4 working hours in Switzerland. The price of medicines in poor countries from Zimbabwe to India was clearly higher than one would have expected from income measures such as GDP per capita or average wages.
Consider central Europe's most advanced post-communist economy. One third of Hungary's GDP, one half of its industrial production, three quarters of industrial sales and nine tenths of its exports are generated by multinationals. Three quarters of the industrial sector is foreign-owned. One third of all foreign direct investment is German. France is the third largest investor.
It merely reflects the output gap between actual and potential GDP. As long as the gap is negative i.e., whilst the economy is drowning in spare capacity inflation lies dormant. The gap widens if growth is anemic and below the economy's potential. Thus, growth can actually be accompanied by deflation.
The current account deficit at well over 4 percent of American GDP absorbs 6 percent of global gross savings and a whopping three quarters of the world's non-domestic savings flows.
Aid Economies Economies that derive most of their vitality from aid granted them by donor countries, multilateral aid agencies and NGOs. Many of the economies in transition belong to this class. Up to 15% of their GDP is in the form of handouts, soft loans and technical assistance. Rescheduling is another species of financial subsidy and virtually all CEE countries have benefited from it.
With only a modicum of overstatement, capitalism can be depicted as the sublimation of jealousy. As opposed to destructive envy jealousy induces emulation. Consumers responsible for two thirds of America's GDP ape role models and vie with neighbors, colleagues, and family members for possessions and the social status they endow.
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