U.S. Recovery Depends on the Domestic Service Economy and Not on Exports

The size of the U.S. economy is about $14 Trillion. Consumer spending accounts for nearly 70% of the economy as U.S. is still a consumer-driven economy.  Unlike other countries, the services sector accounts for the most part of economy. The U.S. exports billions of dollars worth of goods and services to other countries. However exports are still a small component of the GDP as shown in the graphic below. Hence U.S. economic recovery is mostly dependent on the growth of the domestic services economy.With high unemployment rates and lending to small businesses tight, the high reliance on domestic growth is a major weakness for the U.S. economy. So unless domestic private consumption increases strongly the recovery will not be robust.

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Source: Bloomberg BusinessWeek

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