Happy surprise as US trade deficit narrows

Telegraph (UK) ^ | 12MAY06 | Telegraph

[familyop]

The US trade deficit unexpectedly narrowed in March for a second month as exports climbed to a record and the value of petroleum imports declined.

The shortfall in goods and services trade shrank to $62bn, the smallest since August, the Commerce Department said in Washington. The price of goods imported to the US in April jumped by the most in seven months, the Labor Department said in a separate report.

Stronger European and Asian economies, along with a decline in the dollar, may spark greater demand for US exports in coming months, economists said. The smaller deficit prompted economists to raise their estimates of first-quarter economic growth, while the increase in import prices stoked concern inflation may accelerate.

Jay Feldman, an economist at Credit Suisse Holdings in New York, said: "There's been a clear pickup in exports and that reflects strength in the global economy. This will add even more to first-quarter growth." He revised his estimate to 6.2pc, from 5.8pc before the report.

Prices of goods imported into the US rose 2.1pc in April, reflecting higher costs for crude oil and metals, after falling 0.2pc.

The narrower deficit may do little to ease concerns of some US lawmakers, who say China is keeping the value of its currency artificially low to spur exports. The US deficit with China widened 12.5pc in March to $15.6bn.

The dollar recovered a little after the report but was still nearly 2c weaker against sterling at almost $1.90 to the pound. Economists expected a wider trade gap in part because of higher energy prices.

[familyop]

That's no surprise at all. The US dollar is down--less buying power for our importers. And oil is up, making freighter fuel to import cheap Chinese products more expensive.

[poobear]

"The US trade deficit unexpectedly narrowed in March for a second month..."

Didn't read past the proverbial 'unexpectedly' remark. If a Democrat were in office, the reporters would be creaming. Is that allowed?

[Frohickey]

Wonder what we can do to reverse this and make it a trade surplus.

I wonder if we can export all of our union labor.

[AlexandriaDuke]

"Trade Deficit" is a big union myth. If it means anything, it's that our purchasing power and standard of living is diminishing.

We had trade surpluses during the Great Depression.

[Moonman62]

If it means anything, it's that our purchasing power and standard of living is diminishing.

That's what I think.

We had trade surpluses during the Great Depression.

I didn't know that.

[familyop]

"Wonder what we can do to reverse this and make it a trade surplus.
"

Well, the right way to do it would be for our economic powers that be to also allow the global economy to be a free market. Stop diddling with the rate and tighten belts for defense when necessary (Iran a case in point). Allow the USD to float for a change instead of announcing rate increases and the like to hold it up.

"I wonder if we can export all of our union labor."

It would be good PR for the new Asian Triad and an opportunity for our socially left bosses to ratchet up their vanity another notch. China, Russia and Iran would have to conquer a few more countries and ocean routes to keep their populations happy, were we to export a feminist brainwashed, divorcing/cohabiting mob to them.

[Clintonfatigued]

This is good news. The important issue is, is this just a temporary blip due to high fuel prices, or is this the beginning of a long-term trend?

[dennisw]

The shortfall in goods and services trade shrank to $62bn, the smallest since August, the Commerce Department said in Washington

I remember when people complained about a yearly trade deficit of 62 billion. Circa 1988

[familyop]

"This is good news. The important issue is, is this just a temporary blip due to high fuel prices, or is this the beginning of a long-term trend?"

If we nuke China and India, the price of fuel might go down in the long term. [...little irony and humor there.]

But seriously, if oil prices continue to go up, imports will go down and force us to encourage new domestic manufacturing competition. We'd have to back off on some leftist/elitist regulations and causes (voted in by both parties) in order to facilitate that here.

[Hardastarboard]

Heard a great joke today. What did Jesus say to his Teamster disciples? "Don't do anything until I get back."

[hinckley buzzard]

That's no surprise at all. The US dollar is down--less buying power for our importers.

The US dollar held very steady throughout March. It is down now, but only since the last half of April--way too late to affect March figures. Guess again.

[hinckley buzzard]

"Trade Deficit" is a big union myth. If it means anything, it's that our purchasing power and standard of living is diminishing.

Forbes magazine pointed out recently that the US has had a "trade deficit" for all but fifty years of our entire history. It has nothing to do with the health of the overall economy because it is primarily the result of free trades made by commercial interests on both sides, who presumably believe they have made good deals.

[familyop]

"The US dollar held very steady throughout March. It is down now, but only since the last half of April--way too late to affect March figures. Guess again."

Let's not guess again. The yuan has been increased against the dollar since the middle of last summer. The loonie also increased for some time prior to March. The rise in the cost of freight fuel also contributed to the lowering of the trade deficit.

The import party couldn't have gone on indefinitely, anyway. Sooner or later, a nation has to get back to work.

[familyop]

Foreign Exchange Rates
Historical Data
http://www.federalreserve.gov/RELEASES/H10/hist/