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August 12th, 2008

Trade Deficit Narrows

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According to the Census Bureau, the national trade deficit of goods and services narrowed to $56.8 billion in June, down from $59.2 billion in May. Exports increased $6.4 billion (4%) in June to $164.4 billion, from $158 billion in May. Imports rose $3.9 billion (1.8%) to $221.2 billion in June, from $217.2 billion in May.

A weak dollar continued to fuel the export of US products to the foreign market. According to Bloomberg, the dollar has dropped 24% against the Euro in the past five years.

Record imports of petroleum in June helped goose import numbers by nearly two percent higher than in May. The US reportedly spent $44.5 billion on petroleum in June, when a barrel of oil cost over $117, up $11 from May.

Expect imports to increase again in July’s reports when a barrel of crude peaked at over $147. The dollar is showing signs of recovery, but continue to expect cheap US products to attract a foreign eye.

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One Response to “Trade Deficit Narrows”

  1. Ames Tiedeman Says: June 26th, 2011 at 9:05 am

    The United States of America has not had a trade surplus since 1975. We have not had a trade surplus with Japan since April, 1976. Every year since 1983 we have been in deficit with Europe. The last time America had a trade surplus with both Russia and China was a very brief period during the Cold War. We have been running ever increasing trade deficits with South Korea since 1998. Our 1993 trade surplus with Mexico is now a 100 billion a year trade deficit. In the 1970’s, 80’s, and much of the 1990’s our trade deficit was never more than one half of 1% of GDP. We now find ourselves with a trade deficit of between 5% and 7% of GDP depending on how you count. From 2002 to 2007 the trade deficit exploded. The only reason unemployment stayed well under 6% is because of the credit bubble. 63% of all jobs created from 2000 to 2006 were housing or credit bubble related. We did not feel the destructive affects of the trade deficit because of this credit bubble. I have concluded from work I have been doing that America will never get unemployment even under 7% with a trade deficit of over 3% of GDP, without a major credit bubble. The U.S. Economy has actually stopped functioning like a real economy. We literally need a credit bubble to function. America must move from the ideology of free trade to the economic policy of balanced trade. Until this structural shift takes place you can bank on the American economy being the laughing stock of the world economy.

    Regards,
    Ames F. Tiedeman
    Dripping Springs, Texas

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