Trade Deficit is Down

[AZRedhawk44]

They make this sound like a bad thing...

"plunged unexpectedly... recession pushed imports down...deficit dropped a sharp 28.3 percent..."

This is what our economy needs.  Greater demand for US goods abroad, and less dependence on foreign goods here.  Gimme more stories like this.

http://finance.yahoo.com/news/Trade-deficit-falls-for-apf-14890480.html

WASHINGTON (AP) -- The U.S. trade deficit plunged unexpectedly in February to the lowest level in more than nine years as the steep recession pushed imports down for a seventh straight month while U.S. exports managed a small rebound.

The Commerce Department said Thursday that the deficit dropped a sharp 28.3 percent to $25.97 billion, the smallest gap since November 1999. It marked the seventh consecutive month the trade deficit has declined as the severe U.S. recession has cut sharply into demand for imported products.

Wall Street economists surveyed by Thomson Reuters had expected the trade deficit to widen to $36.4 billion in February.

The deficit with China fell 31 percent to the lowest level in three years while the trade gap with Japan dropped to the smallest point in 24 years.

For the first two months of this year, the deficit is running at an annual rate of $373 billion, about half of the $681.1 billion imbalance recorded in 2009. Economists are forecasting the trade gap could remain at current low levels for the whole year, given their expectations that the recession, which began in December 2007, will not be over until the last half of this year and that any rebound will be muted, meaning that consumer demand will remain depressed.

For February, imports of goods and services fell by 5.1 percent to $152.7 billion, marking the seventh consecutive month that imports have dropped.

The decline was led by a 16.3 percent decline in imports of crude oil, which fell to $10 billion, the smallest monthly total since April 2004. The average price of a barrel of crude fell to $39.22, down significantly from the all-time highs set last summer.

Imports of a wide variety of consumer goods from autos to toys and games, furniture, clothing and televisions all dropped sharply in February.

Exports of goods and services posted an unexpected rebound in February, rising by 1.6 percent to $126.76 billion, the first increase after six straight monthly declines. Even with the increase, exports are 16.9 percent below where they were a year ago as American manufacturers continue to struggle with slumping demand at home and overseas.

The February rebound was led by stronger sales of farm products such as soybeans, rice and wheat, and increases in shipments of manufactured goods ranging from semiconductors to telecommunications equipment and industrial engines. Even America's hardhit automakers posted a rebound in foreign sales in February. Those gains helped to offset a big drop in shipments of commercial aircraft.

The politically sensitive deficit with China dropped 31 percent to $18.9 billion in February, still the largest trade gap with any country.

America's deficit with Japan fell to $2.2 billion February, the lowest level since December 1984. The deficit with Canada, America's biggest trading partner, dropped to $1.82 billion in February, the lowest level since December 1998.

President Barack Obama and other leaders of the Group of 20 nations, meeting in London last week, agreed to increase the resources of global lending institutions to help bolster the finances of poorer nations so they can continue to import products.

[charby]

Probably all the American made firearms, ammunition and reloading supplies being bought for hoarding.

[charby]

Moved because its not politics.

[Azrael256]

Trading gaps are a red herring.

[Headless Thompson Gunner]

Sounds like the trade deficit is down simply because all trade is down.  Not good, that.

I've never really understood the folks who say our trade deficit is calamitous.

[drewtam]

Trading gaps are a red herring.

I second that motion.

And besides that, the way they are measuring this is so obscure, its as if they are intentionally misleading people.
What they are measuring....
2008
Imports $10
Exports $5
(Trade gap $5)

2009
Imports $6
Exports $2
(Trade gap $4)
... hey the trade gap went down $1 !!!

[makattak]

Trading gaps are a red herring.

True, however in this case it may be a good thing.

I'm not interested in the fact that our "trade gap" has decreased. I don't really care.

However, it is an illustration of how these so-called "trade gaps" ARE a red herring.

People say: "If we keep importing more than we export, all our jobs will go to China!"

This proves that cannot happen.

If our jobs disappear, people will accept lower wages (like what is happening here as our economy is suffering).

We will then buy fewer foreign goods and foreigners will buy more of our goods.

So, you want a trade surplus? Just agree that Americans need to make less money. We'd have a HUGE surplus.