Will the U.S. Current Account Have a Hard or Soft Landing:Issue brief

摘要

This brief discusses the reasons why the U.S. current account deficit is not sustainable at its current level relative to GDP and explores how it might be resolved. According to the Congressional Budget Office's analysis, the more likely scenario is a soft landing in which the dollars exchange value and the current-account deficit decline slowly. In the less likely event of a sudden stop of foreign financing, the adjustment would not necessarily turn into a hard landing, even though that risk cannot be ruled out.