Trade Deficit at 2nd Highest Level Ever

http://apnews.myway.com/article/20050311/D88OT5C00.html ^ | 3-11-05 | AP News

[soccer_linux_mozilla]

WASHINGTON (AP) - The U.S. trade deficit climbed to $58.3 billion in January, the second-highest level in history, as Americans' appetite for foreign consumer products and automobiles hit record highs. The deficit with China was pushed higher by a surge in textile shipments, reflecting the end of global quotas.

The Commerce Department reported Friday that the January trade gap was 4.5 percent higher than December's $55.7 billion deficit and was just below the all-time high monthly deficit of $59.4 billion, recorded in November.

For all of last year, the U.S. trade gap surged by 24.3 percent to $617.1 billion, setting a record for the third straight year. Analysts believe that 2005 will also set a record, reflecting higher prices for imported oil and continued heavy demand by U.S. consumers for all things foreign.

[soccer_linux_mozilla]

As usual, the largest deficit with a single country was recorded with China, an imbalance of $15.3 billion, the third biggest imbalance on record and up 7 percent from December. The January deficit with China was driven by a 33.6 percent surge in shipments of textiles, which rose to $1.05 billion, reflecting the elimination of global quotas.

[PureTrouble]

Trade deficit numbers will continue to grow because us $ are traded for Oil and oil prices are going up.

Don't expect the numbers to go down until oil prices go down.

[Jaysun]

This is good news in my opinion.

[Jibaholic]

All we need to do to fix this "problem" of cheap low-margin consumer goods is to dabble in socialism. Works every time. Just ask the liberals about living wages and job protection laws.

[Liberty Tree Surgeon]

The total deficit attributable to oil was under $17B, versus the total deficit of $58B. $40B in a month is staggering.

[NEBUCHADNEZZAR1961]

Ha! More evidence of the tremendous success of Free-Trade!

[griswold3]

WTO

[pfony1]

Ho hum...

I run a massive "trade deficit" with my grocery store. They sell me victuals. I pay them with scraps of green paper. They SEEM to be happy with this arrangement, since they haven't raised their prices or tried substituting a barter system.

Please remind me: How does participation in "free trade" create a problem?

[cinives]

They will - where do you think they'll need to spend those dollars we're sending them...

[atomic_dog]

Someday the world will understand that the greatest financial scam in history was getting foreigners to confuse dollars with "Federal Reserve Units" and trade material goods for them.

[econoguy]

Before you check in to the emergency room with an anxiety attack over the trade deficit, take a deep breath and ask yourself -- which countries have large trade surpluses? After all, if trade deficits are bad, that must mean trade surpluses are good, and countries that run them must be doing very well. Sorry, but no. Germany and Japan are two of the largest surplus countries, and they're economic basket cases. In fact, the deficit is primarily a reflection of the fact that we're growing faster than the rest of the world, which leads to an imbalance of imports over exports. Big deal. It's an accounting identity of no real economic consequence whatsoever.

[WakeUpAndVote]

I wonder how many products there are that are way out of line.

Let's just say if that "something" is made in St. Louis. A buyer in New York gets a price quote for it.

He sees another product that does the same thing but it is made in China. But the Chinese product cost much less.

I know that in China they pay their people dirt but, the goods still have to be loaded on a ship and then transported.

Are there any clear examples of China dumping or Made in the USA gone wrong?

We can look at all the numbers we want, but the average American is not going to understand why this is so bad unless there are examples that you can point out. Like why would it cost more to ship a product by 18 wheeler from St. Louis to New York? Wouldn't a cargo ship use more fuel? Pollute more, and cause more of an environmental hazard if it wrecked?

[Jaysun]

Are you kidding? This trade deficit is growing faster than a fire ant's nest. We can't keep having this massive trade deficit every month.

No, I'm not kidding. One only needs to look back at what actually happens when we have a "trade surplus" to see a growing "trade deficit" as wonderful news.

It has nothing to do with trade policy. Trade deficits reflect the flow of capital across international borders, flows that are determined by national rates of savings and investment.

Trade deficits are more a sign of strength than of weakness. The meaning of the U.S. trade deficit is that Americans can afford to buy more goods than their foreign trading partners. This is a sign of America's wealth.

A few other points: History also shows that unemployment drops as the trade deficit rises. American economic expansion has always been accompanied by an expanding trade deficit.

We can go back to lower trade deficits or even trade surpluses if you want to, but I wish that everyone would check out the consequences first. We worked hard to reduce the trade deficit during the 1970s and our trade deficit ballooned during the 1980s, don't you remember the stark contrast in how we were doing economically during those periods?

Trade deficits are great!!! You can check out some of the hard data for yourself here:

www.census.gov/foreign-trade/statistics/index.html

[Moonman62]

We can go back to lower trade deficits or even trade surpluses if you want to, but I wish that everyone would check out the consequences first.

Exports are a symbol of virility to most people, and having a trade surplus indicates that we are successful at penetrating foreign markets.

[snowsislander]

Japan are two of the largest surplus countries, and they're economic basket cases

I am curious what you mean by Japan is an "economic basket case."