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Trade Deficit Widens, Exports Tumble

|| By FITSNEWS || America’s trade deficit increased from $40.7 billion to $41.9 billion in May, according to data released this week by the U.S. Department of Commerce. Economists had expected the deficit to grow even larger – to $42.6 billion – so this isn’t terrible news.  Also the average…

|| By FITSNEWS || America’s trade deficit increased from $40.7 billion to $41.9 billion in May, according to data released this week by the U.S. Department of Commerce.

Economists had expected the deficit to grow even larger – to $42.6 billion – so this isn’t terrible news.  Also the average deficit for the first two months of the second quarter of 2015 (April and May) stands at $41.3 billion. The average for the first quarter of 2014 (January, February and March) was $43.4 billion.

Also, not terrible news.

Exports of goods and services decreased by $1.5 billion – or 0.8 percent – to $188.6 billion in May. Meanwhile imports of goods and services decreased by $300 million – or 0.1 percent – to $230.5 billion.

Trade deficits occur when countries import more than they export – which isn’t necessarily bad.

“America’s trade deficit with the rest of the world is only the sum of the individual choices made by American citizens,” Daniel T. Griswold of the Cato Institute wrote recently.  “Those choices, to buy an import or to sell an export, only take place if both parties to the transaction believe it will make them better off. In this way, the ‘balance of trade’ is always positive.”

True … although sustained deficits that are too high could signal fundamental weaknesses in a country’s manufacturing sector.

Whatever America’s trade deficit is (or isn’t) we will continue to support free trade – which as we’ve repeatedly pointed out is vastly different than the crony capitalist trade deals being pushed by U.S. president Barack Obama and congressional “Republicans.”

***

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3 comments

Bible Thumper July 7, 2015 at 11:59 am

How can you write about the trade deficit without discussion of the impact of rise of the dollar?
This reflects strength of our economy relative to others arround the world. Simply put our exports have become more expensive and imports are cheaper, thus effecting trade decisions.

Of course, this isn’t consistent with the fits, Paul, Zerohedge narrative that the dollar will soon no longer be the dominant currency of ezchange.

Their only explaination for the dollars strength is that “IT’S IRRATIONAL”. A simpler explaination is that “THEY’RE IRRATIONAL.”

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FastEddy23 July 8, 2015 at 10:11 am

Irrational? Not this week.

Stock and bond markets in the tank.

Today, ^VIX volatility up five days in a row. Delayed open + 10 minutes = activity too great to report.

The short sellers are propagandizing, trying to rope in a few more dopes. (CNBC is the worst.)

Expect a down market until August, maybe September. U.S. down -20%, EuroTrash markets down -30%, maybe more. China/Japan steady to lower.

Cash is King for the next three months … Gruberment will be selling Gold/Silver to prop up the U.S. currencies, hold inflation in check.

… All businesses waiting for some tax relief. All investors waiting for another real estate crash/bubble.

(Disclosure. I’m 100% cash, trading accounts, IRA’s, trusts, 401’s, except for one offshore multinational and one (heavily hedged) fund group.)

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