Why do recessions in the U.S. tend to reduce the U.S. trade deficit?
412718
We buy less stuff during a recession (because we have less money to spend), so invariably we end up buying less stuff from overseas, so less stuff is imported in, reducing the deficit.
1154818
At this time the US economy is based on service and technology.\nFor the most part, because Americans are richer in general than much of the rest of the world, the economy floats itself.  The services that they buy from each other keeps each other on top.
579720
because trade is based on currency
952053
My guess is weaken, because the US economy is slowing, and oil prices are mired under $60 a barrel. Also, with the possibility of a spring election, interest rates unlikely to rise.
519568
You need to look up "Bretton Woods II" on the Internet and understand it. Basically, we've been running large deficits to fund the war and pump liquidity into the banking system. In order to do this we sell our debt to foreign central banks (Mostly Japan and China). They buy our debt with the money we give them when we buy their export products (the trade deficit). The best source for commentary on our complicated economy and how it relates to the world can be found on PIMCO's website:\nwww.Pimco.com
522019
Because of the Great Depression
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Does the dog wag the tail or the tail wag the dog.  If the overall economy goes into a depression/recession than we could have a large market crash.  We could also have a market crash due to fear, terrorism etc. which could lead to an economic depression/recession due to the large loss of wealth.  It is a fine balance that takes place in the financial markets.
406997
With many of the young men off to war minorties and women picked up much of the slack. Business boomed because the US exported all of its goods to war torn countries. After the war the good economy lasted through the 20's but it all came crashing down with the great depression
831758
Providing it has sufficient natural resources to satisfy home demand, then yes!\n\nInternational trade occurs because there are surpluses & deficits in resources across the world.
953553
It means imports will cost more and our exports will cost less in other countries. So it should be bad for consumers but good for businesses that export things.
165677
In a recessionary type environment, expansionary fiscal policy can promote employment by increasing demand for goods and services. This occurs when a rise in consumption happens from things like a lowering of taxes giving consumers more free money to spend.\nThe government will borrow more money which will make interest rates rise. This will attract foreign investors which in turn will bring the value of the dollar up. If the dollar is worth more, then imports will be cheaper (while exports will be more expensive to the recipients).
1099197
A currency falls in value because investors lose faith in it as a currency.  Free trade benefits the exporters, not the importers.  Germany and Japan are big exporters to the United States. We export food and guns, they export cars.  Who do you think buys what more?
353475
as we continue to import more than we export and borrow in the world financial markets to do so, the value of a dollar (which is bases on the value of our economy) will continue to decline as it has been doing for the last few years. it's only a matter of time until interest rates creep up to offset those declines. unclear if the declining value of the dollar will also lead to inflation or if the slowdown in our economy due to rising interest rates will offset it.
394549
no, it is just part of the business cycle. sometimes it's up - sometimes it's down.\n\nbtw, we have not been in a true depression for many years - mostly only recessions which is defined as 2 quarters of negative growth
634116
okay, the tariff, as you know, is a tax on imported goods from other countries.  Governments implement tariffs in order to discourage other countries from selling their goods here.  \nHow does this affect our economy? The US's Net exports (a factor which contributes to the nation's wealth, therefore the higher the net exports, the better for our economy) equals the US exports minus imports.  The tariffs reduce imports, and therefore increaces the NET EXPORTS, which adds to the US wealth.  \nThis is also good for another reason.  Becuase the US exports increase and the imports decrease as a result of the tariff, other countries need the US dollar in order to buy the US goods.  As a result of the increase in demand, the dollar will become more valuable, or appreciate, making the dollar stronger abroad.  \n\nThe negative aspect actually comes as a result of the prior two advantages.  As the dollar becomes stronger, it becomes more expensive for other countries to buy the US goods, therefore discouraging the exports that initially rose as a result of the tariff.  So, in the end, there is no change in the NET EXPORTS, this disadvantage and the first advantage balance each other out. \n\nSO, after looking at three main outcomes of implementing a tariff, the advantage to the economy is this:  The dollar becomes stronger abroad, therefore making it cheaper for the US to buy other countries goods, even if fewer imports are being brought in to the US.  It also decreases foreign competition for US based companies\n\nHope this helps, good luck with the paper!
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According to popular thinking a widening in the balance of payments deficit raises the demand and lowers the supply of foreign currency and this leads to depreciation of domestic currency.\n\nThis theory suggests that if local prices are going up, for whatever reasons, this gives rise to more imports and fewer exports i.e. the widening in the balance of payments deficit. In other words if rises in domestic prices exceed rises of prices abroad, other things being equal, this will cause balance of payments deficit and domestic currency depreciation.\n\nThe Austrian School, led by the late economist Ludwig von Mises, however, holds that this cannot be so. As long as the money supply is not expanding peoples monetary income will not increase. Consequently they would be forced to restrict their consumption either of imported or domestic products in response to price rises. In the first case imports will drop and in the second case exports will increase. Thus the balance of payments will be brought to a �favourable� state.\n\nThe Austrian view holds that the exchange rate of a currency like the price of any other good is determined by its relative scarcity in relation to the demand to hold currency. Just like any other good, both supply and demand determine the price, or the exchange rate of a currency. According to Mises the rate between two currencies will tend to equal the ratio of their purchasing power. In other words it is the relative purchasing power that determines the currencies rate of exchange.\n\nFor the mainstream economics the purchasing power of money is the inverse of a price level depicted by a price index. Mises however, showed that the price level and general purchasing power of money cannot be quantified. He showed that the purchasing power of money is an array of specific goods. As an example the purchasing power of one dollar is one kg of potatoes i.e. one dollar buys one kg of potatoes, or half a kg of tomatoes.\n\nIn short the price or purchasing power of one dollar is an array comprising of one kg of potatoes and half kg of tomatoes. However, tomatoes and potatoes are not commensurable. This means that we can only quantify the purchasing power of a dollar with respect to specific goods and not for total goods.\n\nNow, since price level is the inverse of the purchasing power of money it follows then that it cannot be also established. According to Mises various price indices that are employed have nothing to do with price levels and their use leads to erroneous analyses.\n\nFurthermore, mainstream economists fall into the trap of comparing prices of supposedly identical goods in various locations as a proof that the purchasing power of money in the real world differs in different markets at the same time. However, the value of goods is not only determined by their physical appearance but also by their location. Thus a hamburger sold in New York is a different product from a hamburger sold in some remote village in the Sahara desert. For the first is a hamburger in New York while the second is a hamburger in the Sahara desert village.\n\nAccording to Mises as long as the exchange relations exist between two different currency areas, economically the money of one area necessarily functions as the money of the other area, since both moneys must be utilised in effecting an exchange between the two areas. Consequently the purchasing power of currencies is established with regard to a good in the same location.\n\nThus the purchasing power of the German mark and the purchasing power of the US dollar are all established with regard to the same good in the same location. If one loaf of bread in New York is sold for two marks or one dollar then the rate of exchange between the mark and the dollar will be 2:1 (two-to-one). If the rate of exchange differs from this ratio it will set an arbitrage activity until the rate of exchange will adjust towards the ratio of prices.\n\nThus if the exchange rate is 3:1 this mea
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The US economy has a history of cyclical highs and lows.  Most of the others were called 'Financial panics'.  See the bottom of this wikipedia page for more:\nhttp://en.wikipedia.org/wiki/Panic_of_1873\n\nThese lows are charecterized by job loss, banking failures, forclosures, loss of property value and bankruptcies.\n\nIn addition, there have been several recessions, which were like mini-depressions.  In the 1980's sections of the country had housing-value crashes and unemployment was high.\n\nSocial Security was put in place because people who are elderly when a economic downturn strikes can see their lifelong savings wiped out when they have no means to earn it back.  The old-fahioned word for retirement during a economic downturn can be found in the census records: pauper.