Trade Deficit Falls on Import Rise
The lower dollar is boosting imports:EXPORTS(Stupid mistake on my part!)
The U.S. trade deficit fell to the lowest level in 28 months as a falling dollar spurred U.S. exports to an all-time high. The deficit with China jumped to the second highest level on record as imports of toys and other goods surged despite a rash of safety recalls.
The Commerce Department said Friday that the deficit for September dipped by 0.6 percent from the previous month—to $56.5 billion. That was the narrowest trade imbalance since May 2005 and took economists by surprise. They had been forecasting the deficit would rise.
The improvement came from a 1.1 percent jump in U.S. exports, which climbed to a record $140.1 billion. The dollars’ decline against many major currencies has made U.S. goods cheaper and more competitive in foreign markets. For September, sales of American-made cars, computers and farm products including corn, cotton, wheat and soybeans were all up.
Imports also rose in September, climbing by 0.6 percent to $196.6 billion, the second highest level on record. Imports of foreign-made cars, televisions and clothing were all up. Oil imports, however, fell by 0.8 percent to $10.5 billion, an improvement that is likely to be temporary given the recent surge in oil prices to close to $100 per barrel.
The deficit with China rose 5.5 percent to $23.8 billion, second only to a $24.4 billion deficit in October 2006. Imports surged to the second highest level on record, pushed up by big gains in imports of Chinese-made televisions, cell phones, computers and toys as retailers stocked their shelves for Christmas.
Why do these things surprise the “experts?” I thought they were supposed to be, you know, experts.
Imports are up because we’re a more affluent country. Exports are up because we are a vibrant economy. Oh, please note the relationship between our exports to the world of 140 Billion with the deficit with China along of only 23.8. (Note that’s an apples and orange comparison because we aren’t comparing total imports from China, only net trade). Still it shows that relatively speaking trade with China isn’t breaking us because we sell all over the world.
I’m rather surprised that oil imports are only 10.5 billion. Still freeing up domestic energy production is going to shrink that drain our economy.
A trade deficit isn’t a bad thing. It’s a sign that we’re richer than much of the rest of the world. Let the market flow and we’ll be much better off.
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