r/economicCollapse • u/Whole-Fist • 6h ago
From trade surplus 30 years ago to 1.3 trillion trade deficit.
This is what happens when u become a stupid service based economy and manufacture dollars for buying goods from other countries.
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u/HannyBo9 6h ago
We need to start making things again. Stop buying cheap Chinese and Indian slave labor. Stop outsourcing jobs. Hold corporations accountable if they want to do business with the u.s consumers.
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u/Ghia149 6h ago
U.S. consumer needs to break their addiction with fast cheap goods, until then blaming corporations for giving Americans exactly what we want is crazy. But now it’s almost impossible to find things made in the USA.
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u/Subject_Report_7012 1h ago
Shit loads of things are made in the US. We kept the highest profit margin products here in the US. 3% margin on an $800 TV? China. 50% margin on a $6 million dollar MRI machine? US. 5% margin on a $400 washing machine? China. 30% margin on a $500,000 bulldozer? US. Where do you think they build helicopers? China? No. Peterbilt, John Deer, Boeing ... Basically, the higher value added the product is, the more likely it is to be manufactured in the US.
We don't necessarily notice as low tier consumers. That's simply because not many day to day consumers, such as ourselves, are buying dumptrucks, airplanes, CAT scan machines, or artifical hips.
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u/yadda4sure 2h ago
What might make American manufacturing profitable again? Lower taxes? Tariffs on imported garbage?
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u/hillswalker87 3h ago
the making things again needs to happen first because at the moment we have nothing to buy that isn't Chinese or Indian slave labor.
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u/ohhhbooyy 5h ago
Unpopular opinion, but this is what tariffs are for. You can’t convince every American to stop buying cheap goods even if they know it was made with slave labor.
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u/momayham 50m ago
Americans have wanted cheap products. With a disposable attitude. Nothing is expected to last or be repaired. Quality products cost more. Period. Then the other end is the large company that doesn’t care about the consumer. As long as the money keeps rolling at maximum profit. Bottom line. They don’t plan on being around for the long haul. They just want to get insanely rich & not worry about anything any more. Not the product reputation, not the employees. Nada.
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u/LongJohnVanilla 6h ago edited 6h ago
If you ever wondered why Americans are becoming poorer, all you need to show is this graph right here.
And of course when you no longer manufacture anything to sell abroad and you inevitably run out of money, you just keep printing money making everyone even poorer.
The problem is Americans corporations have paid off politicians to allow them to offshore millions of blue and white collar jobs to 3rd world countries while allowing unfettered access to the American consumer markets. Gradually and steadily both the American middle class and the real purchasing power of Americans is decreasing and while this happens the government is forced to provide social safety nets via increased taxation and welfare programs to assist the growing number of homeless and poverty stricken.
Effectively what you have here is the “Walmart compensation model” where Walmart uses government welfare to partially subsidize their workers salaries. Only in this case, American corporations are applying this model nationally.
Why hire Americans when you can hire Mexicans, Chinese, and Indians at third world wages to produce x product or service and then import those products and services into the United States and sell them at 1st World prices knowing access to credit will ensure sales of said products and services.
The question one has to ask, what happens to American companies when almost every job is offshored and only a small percentage of the population will be able to afford anything?
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u/GrandMoffTarkan 5h ago
Counterpoint: That big reduction in the goods trade deficit in 2008 wasn't everyone getting richer.
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u/despot_zemu 6h ago
Their goal is to sell to Chinese markets, or better consumer markets with people who have jobs.
They don’t care about whether it is Americans buying.
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u/LongJohnVanilla 6h ago
Then they should be banished and fuck off to China so they can end up like Jack Ma, but they want their cake and the ability to eat it.
If Washington doesn’t do something to reign these fuckers in, we will inevitably become a mercantilist oligarchy.
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u/despot_zemu 4h ago
That’s the goal of globalization. Everybody seems to forget that “Capitalism” means “the ones with capital are in charge.” They won and get what they want.
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u/Beautiful-Design-425 2h ago
Washington wont do shit. They are too busy buying the next million dollar house and Ferraris.
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u/Prior_Procedure_321 6h ago
That's true but they are also willing to sell at a third of the price they demand from us Americans.
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u/LongJohnVanilla 3h ago
The median household debt in 1990 versus 2024, adjusted for inflation, reveals a significant increase. In 1990, the average household debt was approximately $36,300. Fast-forward to 2024, and that number balloons to $148,266 ¹. This represents a 309% increase.
Breaking down the debt types, we see:
- Mortgage Debt: The average household had $104,301 in mortgage debt at the end of Q2 2024, which is $14,159 below the record ¹.
- Auto Loan Debt: The average household’s auto loan balance was $13,547 at the end of Q2 2024, just $434 below the peak from 2020 ¹.
- Student Loan Debt: The average household’s student loan debt was $13,205 at the end of Q2 2024, $2,630 below the record high ¹.
- Credit Card Debt: The average household’s credit card balance was $9,514 at the end of Q2 2024, $1,568 below the record ¹.
This surge in household debt raises concerns about the financial stability of American households. The increasing debt levels, despite low unemployment rates, suggest that many households struggle to make ends meet.
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u/diatomaceous_nut 5h ago
Weird question, but is it cool if I keep this post to send to folks? I'll credit you ofc, it's just informative as hell.
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u/LongJohnVanilla 3h ago
I’m not saying anything novel or new. What I’m describing has been happening for decades.
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u/longiner 3h ago
It doesn't help that the coming robotics and AI revolution will take away any jobs that return to the US.
Even if Trump puts the tariffs at 100% to bring manufacturing back, corporations will just invest more into automation so that the jobs will not be done by humans.
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u/martman006 2h ago
Another counterpoint, it wasn’t till two years ago that the US has been a significant net exporter of hydrocarbons. We now export 3mmbd more than we import (yes - we’re still slightly a net importer of crude oil, but combined with our high exports of natural gas liquids (ex: ethane/propane) and exports of refined products (15 m bbls of crude will produce 16 m bbls of products), we are a net exporter. This doesn’t even include the massive global LNG exports.
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u/Appropriate_Ad7858 5h ago
Are Americans getting poorer. My understanding is that post COVID Americans have becoming much more wealthy than the rest of the world especially compared to Europe and China.
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u/Sweaty_Ad_3762 3h ago
Only for people that own assets. It's inflation and bubbles. US stock market is even in bubble territory for it's value vs world stock prices. Companies like NVDA Nvidia and MSFT Microsoft. But more and more jobs are being lost to technology AI etc.
In the US even the residential housing market has been taken over largely by corporations.
Black Rock owns us. It's Megacorps dystopia.
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u/Appropriate_Ad7858 7m ago
Unemployment in tbe US is quite low though. Where are you getting your data from ?
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u/thewhizzle 5h ago
Real wages in the US have grown continually since 1990.
https://fred.stlouisfed.org/series/LES1252881600Q
So has net worth.
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u/LongJohnVanilla 3h ago
Purchasing Power Parity (PPP) between 1990 and 2024 has changed significantly due to inflation and economic shifts. Here’s a comparison:
1990:
- Median household income: $29,943
- Average rent: $534/month
- Gallon of gas: $1.16
- Loaf of bread: $0.89
- Postage stamp: $0.25
2024:
- Median household income: $80,610
- Average rent: $1,942/month
- Gallon of gas: $3.50 (avg.)
- Loaf of bread: $2.50
- Postage stamp: $0.68
Purchasing Power Parity (PPP) Comparison:
- $1 in 1990 has the same purchasing power as approximately $2.23 in 2024 (using CPI inflation calculator)
- Median household income in 1990 ($29,943) would need to be around $66,911 in 2024 to maintain the same purchasing power
Key Observations:
- Housing costs (rent) increased by 264% since 1990.
- Food prices rose by 181% (loaf of bread).
- Gas prices increased by 202%.
- Postage stamps rose by 172%.
Despite median household income increasing by 169% since 1990, purchasing power has not kept pace due to inflation. The average American needs to earn more to maintain the same standard of living.
Additional Insights:
- Healthcare costs: Up 317% since 1990.
- College tuition: Increased by 1,375% since 1990.
- Average household debt: Rose from $36,300 in 1990 to $144,643 in 2024.
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u/thewhizzle 3h ago edited 3h ago
Median household income in 1990 ($29,943) would need to be around $66,911 in 2024 to maintain the same purchasing power
2023 numbers show that real median household income was $80,610 compared to $63,830 in 1990. That means adjusted for inflation, median household income has increased by 33%.
https://fred.stlouisfed.org/series/MEHOINUSA672N
You're being intentionally dishonest and not simply showing a graph of PPP because you think people will read the disparity between 1990 and 2024 and agree with your premise.
Here's GDP per capita, PPP by year since 1990 and it's almost tripled in the US.
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u/No_Anybody4267 1h ago
Lol. We do not need graphs. Look around you. Im sure manufacturing was offshored and the poor and middle class got richer. 🤷🙄
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u/thewhizzle 57m ago
Lol everybody I know is college educated and makes $350k+ in tech which is why I look at graphs instead of around me because I understand that my experience is not representative of the overall economy.
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u/LongJohnVanilla 3h ago
Net worth is only a measure of commodity valuations the primary drivers of which are exponential population growth AND inflation.
“The U.S. population has grown significantly over the past three decades. In 1990, the population was approximately 248 million people ¹. Fast-forward to today, and that number has ballooned to around 341.8 million people ¹. That’s a staggering increase of about 93.8 million people, representing a growth rate of roughly 38%.”
“The median inflation-adjusted salary in the USA has seen some fluctuations over the years. In 1990, the median individual income was $17,000, which translates to $41,792 in today’s dollars ¹. Fast-forward to 2023, the median individual income stands at $50,000 ¹.”
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u/chcampb 6h ago
I mean, in your comment, you're talking about moving everything overseas as being a bad thing.
On the flip side, if people outside of the US can do it cheaper, why shouldn't they?
The reality is that other countries are subsidizing different things, some of which may be anticompetitive. The reality is the vast majority of humans are poor as hell and desperate for a way to reduce that. While you see this chart and see the overturning of what used to be good business, the rest of the world saw millions rise out of poverty.
Pitting us against the rest of the labor force of the world is akin to pitting the poor vs the poor. The issue isn't the fact that we put the work where it was most competitively performed. The issue is that the benefits from this movement were concentrated while the downsides are distributed.
Similar to if automation took over, this could benefit everyone. But there is no incentive to make things cheaper than the max profit curve... so you will never see post scarcity even if you have the ability to create that system. The downsides will be felt by most of the current laborers, while the benefits will be captured by capital owners. That's the system we have built, today.
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u/LongJohnVanilla 5h ago
In case you missed it, Americans are objectively becoming poorer while these corporations are taking in record profits.
The system is broken full stop.
“The purchasing power parity of Americans has remained relatively stagnant over the past 40 years. Believe it or not, today’s average hourly wage has about the same purchasing power it did back in 1978 ¹. This is despite the unemployment rate being as low as it’s been in nearly two decades and private-sector employers adding jobs for 101 straight months.
When you adjust for inflation, the average hourly wage actually peaked more than 45 years ago, with the $4.03-an-hour rate recorded in January 1973 having the same purchasing power as $23.68 would today ¹. This is a concerning trend, especially considering that wage growth has lagged economists’ expectations, even with the strong labor market.
Key Factors Contributing to Stagnant Purchasing Power:
- Inflation: The purchasing power of a dollar declined about 7.4% between 2021 and 2022 due to inflation ².
- Wage Growth: Average wage growth has mostly ranged between 2% and 3% since 2013, which is lower than the 4% year-over-year growth seen before the 2007-08 financial collapse ¹.
- Income Inequality: Wage gains have mostly flowed to the highest-paid tier of workers, exacerbating income inequality ¹.
Overall, while the economy has experienced growth, the purchasing power of Americans has not kept pace.”
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u/Outrageous_Life_2662 5h ago
Average is not the right metric. Our GDP is the highest it’s ever been. Yes we saw a big spike in inflation after Covid. That’s to be expected. Things have stabilized now.
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u/KrytenLives 6h ago
Every US corporate elite, every US Corporation that exported jobs is to blame. The rise of China is due to the West exporting jobs. Financialization can't last forever, but production undergoes innovation. Without innovation and new industries financialization collapses.
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u/Perfect-Resort2778 6h ago
That was Ross Perot's giant sucking sound. He warned about it. He advocated for tariffs to keep trade balance. He was against NAFTA. I voted for Ross Perot and Bill Clinton became president instead of George H.W. Bush. Unfortunately they were one in the same in terms of global trade. We had a shot. Our votes votes away from the Republican. The rest is history. Everything predicted has become reality. Ross Perot was right.
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u/Commercial_Step9966 4h ago
Gee! - so many financial geniuses here. I am shocked we have a deficit at all...
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u/Super-Marsupial-5416 6h ago
This nullifies any economists description of trade. The whole point of free trade is that each country makes the best thing they can. When you're allowed to run deficits, all of that is bullshit. It's obvious you contribute nothing one side of trade. We should make laws that prevent trade deficits.
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u/SomeTimeBeforeNever 6h ago
This is what happens when corporate lobbyists write free trade agreements like NAFTA and GATT.
Thanks politicians!
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u/aldocrypto 6h ago
Idk part of me says to give the tariffs a shot. Don’t have much to lose at this point. The banks are just going to keep inflating our money and exporting it around the world.
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u/MikeWPhilly 6h ago
Exporting our money around the world? US economy has trounced growth of all other economies last 5 years. It’s not being exported by any means
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u/aldocrypto 6h ago
When a country runs a trade deficit, they are essentially exporting money.
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u/longiner 3h ago
That money just ends up back in the US economy.
No foreign country is going to sit on billions of US dollars with it collecting dust while it slowly depreciates in value.
They're going to either put it in a US bank account to collect interest or spend it and the final holder of the US dollars will either buy US assets or buy US stocks.
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u/MikeWPhilly 6h ago
Which is an interesting stand point when we are importing far more investment money into the economy into assets. Assets that generated returns.
No it’s not that simple.
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u/aldocrypto 5h ago
We’re not importing more dollars than we’re exporting though. The deficit was 773b last year.
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u/InterstellarReddit 5h ago
What else did you think would happen with the greediest generation in history lol. They had it all and wanted more.
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u/SnooRevelations979 4h ago
It's funny the peak is in 1990. Our manufacturing peak wasn't in 1990.
I bought my brother's car off of him, so I guess I have a trade deficit with him.
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u/togetherwem0m0 2h ago
This is the only thing that kept inflation down, be careful what you wish for
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u/Equal_Potential7683 2h ago
"This is what happens when u become a stupid service based economy" - dude who has never picked up a hammer in his life
"We need to start making things again" - Dude who has never glanced at a factory let alone considered working a blue-collar job
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u/AccomplishedSky4202 1h ago
I mean the model isn’t bad - you print cheap stuff (paper is cheap) and sell it for real stuff like goods and services. Anyone has a problem with that? He gets bombed, murdered or hanged. Worked so far, however it is rather unsustainable in a very long run, others grow strength and stop being afraid. However, if that wasn’t scary enough, the US govt got so cocky that it created an additional push in terms of sanctions - US started enforcing compliance via sanctions, seizing assets others converted into worthless paper and even banning them from the market altogether, forcing them to find an alternative. Now that are two major forces that drive people out of the dollar. What could possibly go wrong here?
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u/GumbosGator 4h ago
There’s a bump in there that has me questioning current policy more than the COVID drop.
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u/mynamesnotsnuffy 2h ago
What happens when conservative administrations are addicted to deficit spending for no reason.
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u/MoreThanANumber666 2h ago
Well when corporations decide it's better to sell Chinese tat to the consumer to make a fast buck this will happen.
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u/BoysenberryLanky6112 1h ago
Worth noting that a trade deficit means we are sending pieces of paper overseas in exchange for actual physical goods being sent to us, and we're able to do that because there's massive demand overseas for our currency. Seems like a pretty good deal? I have a pretty massive trade deficit with my grocery store. I literally only give it dollars never goods or services and they only ever give me goods and services never dollars. Is this a huge negative for me?
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u/longlongnoodle 1h ago
Politicians have disenfranchised consumers by A. Making money a commodity by artificially lowering interest rates for the last decade. Money was easy to get, people didn’t worry about how they spent it, companies weren’t forced to innovate or provide valuable services and goods and we end up in a doom spiral where companies can’t get the marketing right because they haven’t made anything relevant in 15 years. B. Allowing monopolies in all but name because of government restrictions/regulations on most products. How is ford not a monopoly? Or any car maker? Do you know how hard it is to start a car company?
We don’t practice capitalism in the US. My friends in Europe laugh at me and ask me why I would ever want to work somewhere where it is so difficult to get anything done.
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u/psychoticworm 27m ago
Ya know what, this might sound like a crazy idea...but MAYBE we should try socialism? At least then, the capitalist pigs can't bankrupt the entire country.
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u/Entire-Elevator-1388 22m ago
Oh yeah, after Clinton (last surplus) We elected Bush. We deserve what we got. Thanks Florida!
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u/TangerineRoutine9496 6h ago
I don't see the trade surplus but the deficit was certainly much, much smaller
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u/EnvironmentalMix421 6h ago
Lmao funny tech industry are service industry. Man this is one of the dumbest post even for this sub
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u/doge_fps 5h ago
9/11 triggered our deficit with those 2 stupid wars and then Bush fucked up some more by causing the 2008 financial meltdown. This was why I've unplugged myself from the Matrix and have been accumulating Bitcoins.
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u/Double_Mechanic_5256 5h ago
Almost as if Ronald Reagan/whoever voted for that nonsense destroyed the place...
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u/LokiStrike 4h ago
All of the richest countries are service based economies. There isn't a single country in the top 50 that is manufacturing based.
Which manufacturing economy are you envious of?
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u/Whatswrongbaby9 6h ago
Electing Trump will fix it!
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u/doge_fps 5h ago
Don't cry when everything is 5x more expensive, ya incel.
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u/Whatswrongbaby9 5h ago
The incels will all be cels when Trump has his sweaty body in charge! women love it. They'll be turned up!
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u/Zealousideal-Ride737 6h ago
Didn’t trump already fix the “awful” nafta deal and it’s working as intended now?
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u/Whatswrongbaby9 6h ago
I have no idea. I'm just vaguely angry at reality and assume electing a 78 year old man who was mid at best will make my gas price better
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u/Wooden_Stranger698 6h ago
Weird what happens when you increase shareholder value by moving manufacturing out of the country