ECONOMIC AND EXPENDITURE TRENDS

The U.S. international trade deficit with other countries is growing. It is expected to reach $800 billion at the end of 2005, and rise to more than $900 billion in 2007, a sharp increase above 2004's $668 billion deficit. These figures underscore the U.S. government's reliance on foreign countries to finance its huge spending deficit. A move away from international support of the U.S. deficit could weaken the dollar significantly, send stock prices down, and create the need to raise interest rates, which in turn could impact the housing market. (Crutsinger)

http://news.yahoo.com/s/ap/economy

The economy of the People's Republic of China is the second largest in the world when measured by purchasing power parity, with a GDP (PPP) of U.S. $7.124 trillion in 2004. When measured in USD-exchange rate terms, it was the seventh largest in the world, with a GDP of U.S. $1.649 trillion. However, China's huge population of 1.3 billion resulted in a relatively low per capita income of $5,642 at PPP and $1,272 nominal. (Wikipedia)

http://en.wikipedia.org/wiki/Economy_of_the_People%27s_Republic_of_China

To appreciate just how quickly China's economy grew in 2005, one only has to witness the constant lines of giant cargo ships and oil tankers steaming in and out of its ports as fast as they can be handled (BBC News).

http://news.bbc.co.uk/2/hi/business/4528514.stm

The economy of India is the fourth-largest in the world as measured by purchasing power parity (PPP), with a GDP of U.S. $3.36 trillion. When measured in USD exchange-rate terms, it is the tenth largest in the world, with a GDP of U.S. $691.87 billion (2004). India was the second fastest growing major economy in the world, with a GDP growth rate of 8.1 percent at the end of the first quarter of 2005–2006. However, India's huge population results in a relatively low per capita income of $3,100 at PPP. (Wikipedia)

http://en.wikipedia.org/wiki/Economy_of_India

China’s GDP per capita is now 2.2 times higher than India’s (in USD PPP terms). Until the early 1990s, GDP per capita in China and India was at comparable levels, but China adopted wide-ranging economic reform one decade earlier than India. Both economies currently enjoy strong external positions, with ample foreign exchange reserves. Higher oil prices are not likely to have a significant adverse impact on external liquidity. China and India have low external debt as a percentage of GDP, and the ratio of short-term external debt to foreign reserves is low.(Deutsche Bank Research)

http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000192108.pdf

At some point China cannot continue progressing rapidly just by copying foreign technologies, already we see rapid growth of scientific research in China and a friendlier attitude on the part of the Chinese authorities toward intellectual property rights, which will facilitate the creation of new technologies. ("Will China Overtake the U.S.?")

http://www.becker-posner-blog.com/archives/2005/04/will_china_over.html

A report was published by the Bureau of Labor Statistics in 2005, summarizing U.S. consumer expenditure trends. To summarize the trends, the report makes use of The Consumer Price Index (CPI) which is a measure of the average change in prices over time of goods and services purchased by households.

The major findings of the report were as follows:

1. The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.8 percent, while the same for Urban Wage Earners and Clerical Workers (CPI-W) decreased by 0.9 percent.
2. The index for energy increased by 18 percent from last year. Consumers spend 17.414 percent of their income on transportation.
3. The food index has increased at a 2.4 percent rate thus far in 2005, following a 2.7 percent rise for all of 2004.
4. The index for housing rose by 0.5 percent compared to last year. U.S. consumers spend almost 42 percent of their income on housing.
5. The amount spent on medical care also increased by 4.5 percent.

("Consumer Price Index: November 2005")

http://www.bls.gov/news.release/pdf/cpi.pdf

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