This Economic Letter reviews the current facts about the current account deficit and its determinants, and describes the channels through which it is affected by an increase in trend labor productivity growth.

With the 1998 current account deficit approaching $225 billion, attention is again focusing on the deficit's impact on U.S. jobs. Although a high deficit does adversely affect employment in export- and import-competing industries, it also means that considerable foreign capital is flowing into...

We show that the when one takes into account the global equilibrium ramifications of an unwinding of the US current account deficit, currently running at nearly 6% of GDP, the potential collapse of the dollar becomes considerably larger (more than 50% larger) than our previous estimates...

Although this deficit has been rising steadily since the early 1990s, a "hard landing" for the U.S. economy is unlikely. One reason is that only in the United States can so many foreigners invest so much money and get such good returns.

In addition to dominating the list of the world's largest banks, Japanese banks currently account for about two-fifths of measured international banking assets of all banks. Between year-end 1984 and year-end 1988 Japanese banks accounted for slightly over one-half of the measured growth of...

Foreign penetration of U.S. wholesale banking already exceeds that of most other industry groups; unless market capitalization ratios for U.S. banks go up—or down for foreign banks—this trend is likely to continue.

The pace has been most rapid at the wholesale, bank-to-bank and bank-to multinational level; at the retail customer level, globalization will soon quicken, particularly in Europe.