The U.S. lost its position as the world's most competitive economy to Switzerland as budget and trade deficits prompted a slide to sixth in the World Economic Forum's annual rankings.

Switzerland jumped from fourth place last year and Finland, Sweden, Denmark and Singapore all overtook the U.S. with Japan, Germany, the Netherlands and the U.K. rounding out the top 10 in the study of 125 nations by the Geneva-based forum.

The decline in U.S. competitiveness provides another challenge for the world's largest economy as economists at JPMorgan Chase & Co. suggest its potential for growing without inflation is fading and as the expansion shows signs of slowing.

...the number one reason that the US is less competitive is...drumroll...the "twin deficits", which of course refer to the budget deficit and the trade deficit. ...budget deficits have been a fairly regular feature of the US economy for decades, certainly for the last twenty or so years and yet the US economy's performance has been fantastic. In the last twenty-five years we have added the equivalent economic activity of roughly two Chinas or five Germanys. Also, one is compelled to ask how the US slipped in the rankings from last year when our budget deficit over the period was shrinking. It must have been the other twin - the trade deficit. Fine, our trade deficit did indeed grow, pretty much just like the majority of years during the exceptional twenty-five years just past. So why now? Why is our projected $850 billion trade deficit trouble when our $726 billion trade deficit last year didn't prevent us from taking the top spot? Is crossing the $800 billion mark the problem?

...the next reason given - Hurricane Katrina. Yes, our government was slow to respond to hurricane Katrina so we are less competitive as a nation. This is just my impression but I think government is no more or less competent than in years past, how could this effect the ranking? How is it that flat-footedness on something that the government was never capable of handling nor is really supposed to handle means our economy is less competitive? Did France take a hit in their standing for letting enraged Muslim youth burn cars and rampage for weeks before responding?

...So what else? Infant mortality and HIV/AIDS. Yes, the US is apparently less competitive because we have more AIDS patients and more babies dying. ...We have more preemies born here because we have such excellent prenatal technology and we have the will to give preemies a chance and many of them die for obvious reasons - other nations don't count or even birth their preemies. AIDS? Is AIDS ravaging a broad spectrum of our productive, working age adult population or is it confined to a subset of adults who are associated with specific behaviors like intraveneous drug use and unprotected sex? It's the latter. Just because we have a higher incidence of AIDS patients relative to Finland reveals not one iota about our relative economic competitiveness.