We were told for years that the growing trade imbalance was a problem. Well November's numbers are out and the trade deficit shrunk by almost 30% . Good news ?

Let's see... good strong growing economy... large trade deficit... economy goes into recession and shrinks... trade deficit shrinks. . hmmm

The deficit shunk because there isn't enough spending, demand has dried up. Remember that most of the trade coming into the US is manufactured goods which are in less demand. The trade on the way out of the US is stronger because it's resource and food based which aren't affected by discretionary spending as much as manufactured goods are.

This would result from the decrease in cost of imported oil, as there appears to be a world-wide recession. It illustrates why proper analysis requires more than one month's figures. Walter Williams, economist, has an interesting view: "I buy more from my grocer than he buys from me, and I bet it's the same with you and your grocer. That means we have a trade deficit with our grocers. Does our perpetual grocer trade deficit portend doom? If we heeded some pundits and politicians who are talking about our national trade deficit, we might think so." Eidelblog: Walter Williams: the trade deficit is nothing to worry about

Walter Williams is right on. The answer is that a trade deficit is an indicator of good times.

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Originally Posted by tomder55

Walter Williams is right on. The answer is that a trade deficit is an indicator of good times.

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And a trade surplus is an indicator of good times. Um... are there any trade situations that are bad times? :rolleyes:

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Originally Posted by tomder55

Well November's numbers are out and the trade deficit shrunk by almost 30% . Good news ?

Walter Williams is right on. The answer is that a trade deficit is an indicator of good times.

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Hello tom:

Couple things...

Didn't you answer your own question? If a trade deficit is good, and ours went DOWN last month, it means that times are bad, and they are. No?

I could have it backwards... I'm not too smart about these things...

But, our dollar went through the roof recently. A rising dollar means the goods we import are cheaper, and the stuff we export more expensive. That would have a lot to do with the change. Wouldn't it?

Most times, a rising dollar meant that we were having good times... Now, however, the rising dollar has to do with most of the world's capital fleeing THEIR economy and finding the worlds only real safe haven - and that would be T bills or treasury bonds.

OR, there's a bubble building in the dollar. Perhaps the hedge funds jumped into THAT when they bailed out of oil. I don't know.

Buy gold.

excon