During 2005, the CAD to GDP ratio was close to 6.4 per cent of GDP, the highest ever CAD for the US (Table 1). It is widely agreed that wealth effects arising from increasing asset prices, particularly of housing, have also contributed significantly to lower savings rates and higher consumption rates in the U.S.
The large current account and fiscal imbalances in the US also find its reflection in the savings-investment mismatches that have risen substantially in the present decade. The private net savings in the US has declined from 8 per cent of GDP in the 1980s to less than 2 per cent in 2005.