But although the U.S. economy continues to be far more vigorous than most others, foreign investors may be becoming less willing to finance the gap between what we spend and what we produce. With the current account deficit climbing, that gap is growing fast - evidently faster than the appetite for U.S. assets. Private capital flows into the United States have ceased expanding rapidly.
Governments especially those of Japan and China - have taken up the slack by purchasing U.S. assets, but the shortfall in the desire to supply savings to fund our deficit has been reflected in a significant drop in the dollar on foreign exchange markets since early 2002.