Posted on 11/11/2007 3:48:54 AM PST by MNJohnnie
WASHINGTON -- 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.
Those gains were occurring despite a string of high-profile recalls of Chinese products this year - everything from toys with lead paint to defective tires and chemical-tainted toothpaste and pet food ingredients.
Through September, the trade deficit is running at an annual rate of $703.4 billion, down by 7.4 percent from last year's $758.5 billion. Analysts believe that surging exports from a weaker dollar will lead to a narrowing of the deficit for the full year, breaking a string of five consecutive records.
Critics of President Bush's trade policies say that even with the narrowing of the deficit this year, the imbalances are still running at unsustainable levels, forcing the United States to depend more and more on foreigners' willingness to hold dollars to finance the imbalances.
While a falling dollar is good for exports, it raises worries that at some point foreigners will be less willing to purchase dollar-denominated investments such as U.S. stocks and bonds. Such a change in sentiment could send stock prices plunging and push up U.S. interest rates.
The administration scored its first congressional victory on trade this week when the House passed a free trade agreement with Peru. However, approval of three other deals with Panama, Colombia and South Korea are expected to face tougher challenges in Congress.
For September, America's foreign oil bill dropped by 0.8 percent to $10.5 billion reflecting a drop in volume. The average price for a barrel of imported crude rose to a record $68.51 in September and is expected to climb even higher with the recent spike in spot oil prices, which traded this week near $100 per barrel.
The imbalance with the European Union dropped a sharp 37.1 percent to $6.4 billion. The dollar has fallen to record lows against the 13-nation euro currency, which means that U.S. products are cheaper in those markets while European goods are more expensive for American consumers.
The deficit with Canada, America's largest trading partner, dropped by 3.2 percent to $4.9 billion while the imbalance with Mexico fell 9.3 percent to $6.3 billion
Fixing this is really very simple, and everyone from Hunter to Paul to Huckabee to Thompson knows it. So do the rest of the clowns, but they won’t risk the loss of power inherent in it.
For the US to reverse the trade imbalance would require the US Dollar to briefly collapse.
That won’t happen (G-d I hope). That being said, this is still bad news, The US dollar can drop 20%+ against foreign currencies and we still can’t compete in international trade. No matter how much we drop the US dollar, we still can’t stem the flow of imports from China. Long term outlooks for US economic growth will be revised downward if this trend continues for 3 or 4 quarters. It will be seen as a signal that no matter what US based manufacturers do to compete internationally, in the long run third world manufacturing facilities using best of trade technologies will eat away and eliminate US foreign and domestic marketshare.
If you got another reasonable explanation of this data, please share.
The whole “US exports will climb to record levels” idea is a complete sham.
First, we are talking about numbers measured in dollars, an item we all are admitting is not what it used to be.
Second, we have been sold to love the “global economy”. What does that mean? It means any serious manufacturing endeavor in America relies on imports - imports that are rising in cost.
Third, if somebody opens yet another Starbucks franchise down the street, YEAH!!! that’s what the dollar needs! Not steel, not wheat, not electronics, we need another Starbucks! And the pimply faced kid behind the counter is gonna save Social Security!
America needs production. America needs education. America needs agriculture. America needs ideas about how to keep the world going and even prosper while resources dwindle.
LOL no doubt!
“America needs production. America needs education. America needs agriculture. America needs ideas about how to keep the world going and even prosper while resources dwindle.”
Bingo. You have pinpointed what needs to be done. Now, how?
But doing it cheaper isn’t the issue- it’s doing it better. ex: Switzerland doesn’t produce the world’s cheapest watches and chocolate, just the best. They are also self sufficient, and they have lots of gold.
What we need is the removal of the income tax burden on domestic manufacturing. We produce goods here at an instantaneous disadvantage to foreign competitors.
How? see post 2.
It’s the necessary first step. At one time it was a good idea- now, it’s becoming a necessity.
A large number of the most innovative electronic technologies ever invented were invented here.
Then promptly sold to the Japanese.
I’m not slamming the Japanese at all. I’m slamming the money grubbers who had no vision.
And now we are hell bent on selling the rights to use OUR OWN HIGHWAYS to foreigners.
If you control the roads, you control the people. Period.
I agree, and I agree with the lack of vision you mention. I’m not an economist by it seems to me that we’ve become so focused on the one or two quarters ahead in the business cycle that we have neglected to think about how best to strategically posture ourselves for the longer haul.
I agree, in general, but when you go to WalMart the merchandise on the shelves is not there because it is the highest quality. It’s there because the WalMart buyers were able to get the best prices on those items, and they were ‘high enough’ quality to be acceptable. Most of us don’t automatically buy the best. We buy the best we can afford or feel comfortable buying.
I absolutely agree about the tax burden. There are also the defensive costs industry has to contend with to protect themselves against product liability etc.
I Suspect we are already far beyond one or two quarters ahead.
Didn’t the SR-71 Blackbird make it’s debut like ‘71?
RBTLines.
Yep- litigation defense is insane in the US. I never realized how bad it was until I traveled- the lack of concern for getting sued was quite noticeable.
“The first thing we do, let’s kill all the lawyers!”
Ol’ Man River, that Ol’ Man River
He must know somepin’, but he don’t say nothin’
He just keeps rollin’, he keeps on rollin’ along
He don’t plant taters, and he don’t plant cotton
And them what plants ‘em is soon forgotten
But Ol’ Man River, jest keeps rollin’ along
You and me, we sweat and strain
Bodies all achin’ and wracked with pain
Tote that barge and lift that bale
Ya get a little drunk and ya lands in ja-ail
I gets weary and so sick of tryin’
I’m tired of livin’, but I’m feared of dyin’
And Ol’ Man River, he just keeps rollin’ along
According to Wikipedia the SR-71 debuted in like 1965. It was amazingly advanced for its time.
IIRC, China has pegged its currency to the US dollar. So, however much the US dollar rises or falls, the trade advantages that China enjoys will continue, because relative to the Chinese currency, the US dollar hasn’t changed in value.
A recession is always accompanied by an “improved” trade deficit or a “trade surplus.” Trade Deficit is a measurement invented so that people can have something to wail and tear their clothes about when the economy is good and times are prosperous, i.e. usually during Republican administrations(and Clinton’s, too, because it was the Republican Congress that made the difference in the economy).
Prosperity is always marked by trade deficits.
My brother was AF and said he couldnt say anything, but Mach 3 was bullturds.
We need to figure out creative things for folks from Oregon to do when they don’t need to pump gasoline for a living.
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