US trade gap a sign of growing economy, says Snow

AFP) ^ | Wed Jan 12,10:41 AM ET

[jb6]

NEW YORK (AFP) - US Treasury Secretary John Snow said the record US trade deficit was the result of strong economic growth and the United States outpacing the growth of other countries.

AFP/DDP/File Photo

"The trade gap reflects two things: that our economy is growing at a fast pace and we are growing faster than our trading partners," Snow told reporters.

The United States posted a record trade deficit in November, the government said Wednesday.

The Commerce Department (news - web sites) estimated that US exports sank 2.3 percent in November, driving the US trade deficit to all-time high of 60.3 billion dollars.

While exports fell to a five-month low of 95.6 billion dollars, imports rose 1.3 percent to a record 155.8 billion as the bill for imported oil rose by 17.7 percent, or more than 2 billion dollars, to a record 14.2 billion

[ninenot]

Nice point.

[ninenot]

Unfortunately, the investments for growth are NOT being made in the USA, by and large.

The investment capital is flowing to other places; thus, the growth will not be here.

[pissant]

A 4%+ growth rate for a mature economy? I'll take it every year.

[ninenot]

You think that an average effective tax/regulatory cost in excess of 50% is NOT a kleptocracy?

[pissant]

Move to Canada if you want to see what Kleptocracy is like.

[LowCountryJoe]

Some dont have a clue...

I concur!

A trade deficit is equal to a capital account surplus because NET EXPORTS = NET CAPITAL OUTFLOW. Given the choice between a trade deficit/capital account surplus and a trade surplus/capital account deficit, I'll take the former over the latter every time.

[LowCountryJoe]

The free traders use this line of argument all the time. All they need to do is post a chart proving that the US GDP is a larger percentage of the global economy than before we began running these trade deficits decades ago.

Hey, would you like to see the relationship between NET EXPORTS and the percentage change in GDP once again?

[fallujah-nuker]

Actually the proper analogy would not a raise to finance your increased expenditures, but by trading away assets. Sell off 6% of your house to finance your expenditures, after all your house will rise in value so that your equity will grow, you were able to enjoy greater consumption and have an increasing net worth. You were able enjoy a free lunch.

[LowCountryJoe]

The Trade Deficit is a result of massive borrowing by Americans.

Maybe that's some of it. But it's also driven by capital flows and export flows just as much as anything else.

[A. Pole]

A trade deficit is equal to a capital account surplus

So was Alfonso Nunez de Castro right when he said in 1675 the following?

"Let London manufacture those fine fabrics of hers to her heart's content; let Holland her chambrays; Florence her cloth; the Indies their beaver and vicuna; Milan her brocade, Italy and Flanders their linens...so long as our capital can enjoy them; the only thing it proves is that all nations train their journeymen for Madrid, and that Madrid is the queen of Parliaments, for all the world serves her and she serves nobody."

[Tennessean4Bush]

So we got more money going out than whats coming in. Sooner or later it'll all get us.

The only times we have not had a trade gap in the last 60-70 years we were in a recession. So, tell me again, why do we want a trade surplus?

[fallujah-nuker]

No, I want you to post the data that shows the US GDP rising as a share of global output so you can prove Snow's point. You could really pull the rug out from the protectionists when you prove to them that the US GDP is a higher percentage of the global total than say 1956, or 1966. Show everyone the dramatic contrast with before our GDP started to outgrow the rest of the world as evidenced by the trade deficits. Here's your chance to make the protectionists eat crow.

[LowCountryJoe]

That would be one way of looking at it, however, there's no free lunches. In this case, Spain also needed to produce something of value for the rest of the world to consume otherwise there will be a reversion toward a balance (or further into trade surplus). Today, capital is much more mobile. Multinational corporations have added a whole new level of complexity to just looking a numbers regarding trade...these production facilities may be off shore but in many cases they are still owned by American individuals.

[fallujah-nuker]

The only times we have not had a trade gap in the last 60-70 years we were in a recession. So, tell me again, why do we want a trade surplus?

Good point, I don't know why all the protectionists want a repeat of the post WW2 decades of recession.

[A. Pole]

Multinational corporations have added a whole new level of complexity to just looking a numbers regarding trade...these production facilities may be off shore but in many cases they are still owned by American individuals.

Think about this word - nationalization! On the other hand many of "American" firms are owned by foreigners (French, Germans and others).

[LowCountryJoe]

On the other hand many of "American" firms are owned by foreigners (French, Germans and others).

And they employ Americans too. What's the problem?

[PFC]

I am so sick of "spin". They must think we are really stupid.

[A. Pole]

What's the problem?

Aaargh.

[LowCountryJoe]

I don't know where to find the world's GDP numbers but that would be interesting to see. Even if I could show you numbers supporting what you ask for, chances are the trend could not continue. The 'catch-up effect' is something I happen to subscribe to as a theory.

[LowCountryJoe]

Aaargh.

Oh, I know what your problem is, they frown on unions. That's it, right...that's your beef?