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Home » Forex Market Discussions » Greg Michalowski's blog

US Trade Deficit 63.1B

Posted by Greg Michalowski on Fri, 01/11/2008 - 8:33am in

Worse than expected.

Import Prices highest year increase on record.  Import prices up 10.9% year.  2.9% excluding oil for the year.  Deflationary effect of cheaper imports is waning as prices go up. 

  • Exports increased to $142.3 billion in November from $141.7 billion in October.
  • Imports increased to $205.4 billion in November from $199.4 billion in October.
  • For goods, the deficit was $72.7 billion in November, up from $66.9 billion in October. For services, the surplus was $9.6 billion in November, up from $9.2 billion in October.

    • ANALYSIS OF THE FIGURES:  A lower dollar has good and bad with regard to trade.  The good is we export more goods overseas as our goods become more competitive

    The bad is it raises the cost of imports. IFor example, if goods from China are still cheaper to import because of lower employment costs, we don't manufacture these good internally anymore, etc., but more expensive because of a more expensive foreign exchange rate, we import inflation. 

    Also, since the US is oil dependent, if the price of oil goes up, we import more $ value of oil, even if the amount imported is the same (oil imports x price = Oil Import Value.  If price goes up, the Oil Import Value goes up).

     

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