US Trade Deficit

[Southern Senator North Carolina Yankee]

I am posting this largely just for the chart which shows how much progress has been made in reducing the Trade deficit. With a falling dollar I don't see how it will substanially rise about $35 Billion per month.

Year   Jan     Feb   Mar    Apr   May    Jun    Jul     Aug   Sep   Oct    Nov    Dec   Total
2009 -37.0 -26.6 -28.9 -29.1 -26.4 -27.5 -31.9 -30.7                                      -238.0
2008 -61.5 -61.7 -59.4 -62.1 -60.5 -60.2 -64.9 -60.9 -60.1 -59.4 -43.2 -41.9 -695.9
2007 -58.6 -57.8 -61.6 -59.7 -59.2 -58.7 -57.9 -56.3 -57.3 -57.0 -59.5 -57.8 -701.4
2006 -67.0 -62.5 -62.2 -62.6 -64.9 -63.6 -66.8 -67.8 -64.7 -58.8 -58.4 -61.0 -760.4

At least we are not losing $760 Billion a year any more. The reason we needed the housing bubble was to mask this inconvenient truth about our economy. Keep in mind that about 1/3 of that is imported Petroleum. For the year. For the year it will probably fall in the $350 Billion to $400 Billion range. Thats still too high but its better then almost $800 Billion.

[Southern Senator North Carolina Yankee]

From October 1999 to Aug 2009 we lost $5,221,400,000,000 from our economy due to our trade imbalance, our addiction to foriegn oil, and American consumer's inabililty to save even a trivial 5% of there income, the Chinese save 40% and 50%. Thats 40% of our current GDP and its our lost future.

[phk]

The trade deficit actually rising would be a signal of recovery, which is a sign that things aren't going to be good.

Check out figures before-and-after the early 1990s recession, the dot-com bubble, its burst and the recovery. Reverse correlation between change trade deficit and change in GDP.

[Southern Senator North Carolina Yankee]

The trade deficit actually rising would be a signal of recovery, which is a sign that things aren't going to be good.

Check out figures before-and-after the early 1990s recession, the dot-com bubble, its burst and the recovery. Reverse correlation between change trade deficit and change in GDP.

The numbers on that page didn't go back any further then Oct 1999. I don't see how any recovery can be long lasting if the Trade deficit goes back up to 700 or 800 Billion dollars.

[Southern Senator North Carolina Yankee]

http://www.tradingeconomics.com/Economics/Balance-Of-Trade.aspx?Symbol=USD


The link somehow got deleted out of the previous post.

Full chart

Year    Jan   Feb    Mar    Apr    May   Jun    Jul     Aug   Sep    Oct    Nov  Dec   Total
2009 -37.0 -26.6 -28.9 -29.1 -26.4 -27.5 -31.9 -30.7                                      -238.0
2008 -61.5 -61.7 -59.4 -62.1 -60.5 -60.2 -64.9 -60.9 -60.1 -59.4 -43.2 -41.9 -695.9
2007 -58.6 -57.8 -61.6 -59.7 -59.2 -58.7 -57.9 -56.3 -57.3 -57.0 -59.5 -57.8 -701.4
2006 -67.0 -62.5 -62.2 -62.6 -64.9 -63.6 -66.8 -67.8 -64.7 -58.8 -58.4 -61.0 -760.4
2005 -55.6 -57.6 -53.0 -57.2 -56.2 -58.3 -58.0 -58.4 -64.9 -67.4 -64.2 -64.4 -715.3
2004 -44.7 -44.2 -46.3 -47.3 -48.2 -54.7 -51.4 -53.2 -51.5 -55.1 -58.8 -54.5 -610.0
2003 -41.0 -39.5 -43.6 -42.3 -41.0 -40.0 -41.4 -39.8 -41.7 -41.2 -39.8 -43.8 -495.0
2002 -29.8 -32.4 -31.0 -33.9 -34.2 -35.3 -34.3 -36.3 -36.9 -35.1 -39.3 -43.1 -421.6
2001 -35.3 -29.6 -32.9 -31.6 -28.1 -29.6 -30.4 -28.6 -31.2 -31.2 -30.0 -26.9 -365.5
2000 -27.6 -30.5 -31.9 -29.2 -30.2 -31.4 -32.1 -30.5 -34.6 -34.1 -33.5 -34.2 -379.8
1999                                                                                     -24.1 -25.7 -26.6 -76.5

[Vepres]

I think cultural and business trends in the US will work to solve the problem, unintentionally of course. For example, outsourcing is losing its popularity amongst managers, at least in the IT business (I have a relative who works for Level 3). I have been following American auto manufacturers lately, and they too seem to be building more in the US (even Ford, which the federal government has no control over).

Human behavior is often a pendulum between two extremes, and we reached the most extreme of outsourcing and trade deficits around 2007. Now, the question is whether these positive trends will continue or if they will reverse when the economy begins growing substantially again.

[Southern Senator North Carolina Yankee]

I think cultural and business trends in the US will work to solve the problem, unintentionally of course. For example, outsourcing is losing its popularity amongst managers, at least in the IT business (I have a relative who works for Level 3). I have been following American auto manufacturers lately, and they too seem to be building more in the US (even Ford, which the federal government has no control over).

Human behavior is often a pendulum between two extremes, and we reached the most extreme of outsourcing and trade deficits around 2007. Now, the question is whether these positive trends will continue or if they will reverse when the economy begins growing substantially again.

There is a reason behind that and its money. As the dollar descends it gets harded to produce offshore and then import it to the US. In late 2007 and early 2008 we began to see this shift occur when company's like Canon announced they were moving some production capacity back to the US to excape the low dollar and rising energy(shipping costs). The crash late last year slowed this trend cause the dollar jumped up back to the mid 90's from about 71-75 and oil plunged down to $38 a barrel. Now with the Dollar back around 70 and dropping, Oil getting rising again, that trend should start again.

[Beet]

The descent in the dollar from 2006 to 2008 only minimally reduced the trade deficit. (Part of the problem of course-- is that the Chinese RMB was rising much more slowly against the dollar, and it has not risen against the dollar at all in 2009). If you really want to reduce the trade deficit, the most surefire way -ironically- is to nuke the economy. The 3.5% decline in GDP in late 2008/early 2009 cut the trade deficit in half. In a sense, this is a self correcting problem. But then again so is gravity- the trouble is the 'impact'.

[phk]

The trade deficit actually rising would be a signal of recovery, which is a sign that things aren't going to be good.

Check out figures before-and-after the early 1990s recession, the dot-com bubble, its burst and the recovery. Reverse correlation between change trade deficit and change in GDP.

The numbers on that page didn't go back any further then Oct 1999. I don't see how any recovery can be long lasting if the Trade deficit goes back up to 700 or 800 Billion dollars.

http://www.census.gov/foreign-trade/statistics/historical/index.html

Use that link for data, Yankee.

[Southern Senator North Carolina Yankee]

The descent in the dollar from 2006 to 2008 only minimally reduced the trade deficit. (Part of the problem of course-- is that the Chinese RMB was rising much more slowly against the dollar, and it has not risen against the dollar at all in 2009). If you really want to reduce the trade deficit, the most surefire way -ironically- is to nuke the economy. The 3.5% decline in GDP in late 2008/early 2009 cut the trade deficit in half. In a sense, this is a self correcting problem. But then again so is gravity- the trouble is the 'impact'.

Yes cause it killed imports. My interest is in seeing imports stay marginally the same or slightly increased while exports explode upward. The dollars descent achieves this directly by making our goods cheaper and indirectly by raising the costs of oil and thus the cost of Transportation.

[opebo]

Yes cause it killed imports. My interest is in seeing imports stay marginally the same or slightly increased while exports explode upward.

This is highly unlikely. 

[Vepres]

Again, I think there is a shift in the culture of management that will start bringing more jobs back to America, thus creating more exports and decreasing the trade deficit. There are many companies that outsourced too much to get the short term stock bump even though in the long term these decisions hurt them, which they are starting to do (at least in the IT sector w/ India).

[Southern Senator North Carolina Yankee]

Yes cause it killed imports. My interest is in seeing imports stay marginally the same or slightly increased while exports explode upward.

This is highly unlikely. 

Yes cause as companies move back to the US Imports would naturally go down to reflect that. I don't want the economy to crash again to achieve the rebalancing but the rebalancing does have to occur one way or another.

Again, I think there is a shift in the culture of management that will start bringing more jobs back to America, thus creating more exports and decreasing the trade deficit. There are many companies that outsourced too much to get the short term stock bump even though in the long term these decisions hurt them, which they are starting to do (at least in the IT sector w/ India).

As I said its motivated partly by expectations. People expect that oil will be much higher in the future and the dollar much lower. You must not forget that shifts in management culture often follow shifts in the money.

[opebo]

Yes cause it killed imports. My interest is in seeing imports stay marginally the same or slightly increased while exports explode upward.

This is highly unlikely. 

Yes cause as companies move back to the US Imports would naturally go down to reflect that. I don't want the economy to crash again to achieve the rebalancing but the rebalancing does have to occur one way or another.

Actually I just think you find with moribund societies (particularly moribund empires), that they just slowly and inexorably drift downward, poorer and poorer, without any major rebounds.  Look at Britain.

[Bo]

The trade deficit actually rising would be a signal of recovery, which is a sign that things aren't going to be good.

Check out figures before-and-after the early 1990s recession, the dot-com bubble, its burst and the recovery. Reverse correlation between change trade deficit and change in GDP.