The United States has dropped two spots, from five to seven, in the World Economic Forum's latest ranking of global competitiveness. 

Still, a top ten ranking, and WEF says in its release that the United States "remains world’s innovation powerhouse despite decline in overall ranking." From the Country Profile Highlights:

The United States continues the decline that began a few years ago, falling two more positions to take 7th place this year. Although many structural features continue to make its economy extremely productive, a number of escalating and unaddressed weaknesses have lowered the US ranking in recent years. US companies are highly sophisticated and innovative, supported by an excellent university system that collaborates admirably with the business sector in R&D. Combined with flexible labor markets and the scale opportunities afforded by the sheer size of its domestic economy—the largest in the world by far—these qualities continue to make the United States very competitive.

On the other hand, some weaknesses in particular areas have deepened since past assessments. The business community continues to be critical toward public and private institutions (41st). In particular, its trust in politicians is not strong (54th), perhaps not surprising in light of recent political disputes that threaten to push the country back into recession through automatic spending cuts. Business leaders also remain concerned about the government’s ability to maintain arms-length relationships with the private sector (59th), and consider that the government spends its resources relatively wastefully (76th). A lack of macroeconomic stability continues to be the country’s greatest area of weakness (111th, down from 90th last year). On a more positive note, measures of financial market development continue to indicate a recovery, improving from 31st two years ago to 16th this year in that pillar, thanks to the rapid intervention that forced the deleveraging of the banking system from its toxic assets following the financial crisis.

Our bolding. It's notable that the WEF identifies "macroeconomic stability" as the country's major weakness. That's consistent with the Harvard Business School's report, "Prosperity at Risk," based on a survey of nearly 10,000 Harvard Business School alumni. The macroeconomic environment -- soundness of government budgetary, interest rate, and monetary policies -- was described as a weakness in U.S. competitiveness, and deteriorating.

Fiscal cliff, anyone?

The full WEF report is available here.

• Associated Press, “Survey: US global competitiveness falls again”
• DutchNews.nl, “The Netherlands overtakes Germany, US in competiveness ranking”
• Wall Street Journal (blog), “Singapore Among Most Competitive Economies in Asia”
• FirstPost, “How bad governance is ruining India’s competitive edge”