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Ian R. Campbell  -  Mar 17 01:54 PM 66 Posts 1 Follower 0 Following
Trade Deficits
An article yesterday titled 'Trade gap widens 15.1% in January' - reading time 2 minutes - reported that the U.S. trade deficit increased to U.S.$46.5 billion in January from a (revised) December number of U.S.$40.3 billion.  Analysts apparently had expected a January trade deficit of U.S.$41.5 billion.  The increase in the trade deficit was attributed to more than the higher price of imported oil experienced in January.  The article quotes one economist as saying that the latest surge in imported oil prices will push the U.S. trade deficit to about U.S.$50 billion per month over the next few months.  To me, all of this is evidence of continuing erosion of the U.S. fiscal position. 

 

Note:  If you read the article you will find it also says that "excluding the impact of inflation, the deficit in real terms rose 7.5% to $49.51 billion in January" and that "The trade deficit had added a whopping 3.4 percentage points to fourth-quarter growth".  I can't make sense of either of these statements as in the case of the first a nominal (inflation included) number ought always to be higher than a 'real' number assuming inflation exists.  In the case of the second statement I can only conclude the author means '3.4% from what it otherwise would have been, if ?'

 

A second article yesterday titled 'China reports largest trade deficit in 7 years' - reading time 3 minutes - reported that China ran a U.S.$7.3 billion trade deficit in Feburary as contrasted to an expect U.S.$5 billion surplus.  Attributed in part to the Chinese New Year distorting Chinese trade data, this trade deficit number resulted from a shortfall from expected growth in Chinese exports, and a lower than expected increase in Chinese imports.  As I see things, this is hardly a 'blip' on the Chinese radar screen and as such ought to be given no weight pending release of Chinese trade surplus/deficit numbers over the next few months.

Topics:   U.S. Trade Deficits, China Trade Deficit
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