Closing the Trade Gap is Key!

The greenback is down, but the trade gap keeps growing -- as it will until the U.S. increases savings.

Despite the 50% drop in the dollar against the euro since early 2002 and a slowdown in U.S. demand this year, the trade gap continues to hit new records -- $666 billion in 2004. It took 0.6 percentage points from gross domestic product growth last year and shaved off 1.5 percentage points in the first quarter.

The trade gap remains the major threat to the continuation of the current economic expansion in both the U.S. and other industrial countries, as well as the stability of world financial markets.

More here.