Posted on 09/28/2007 2:32:19 PM PDT by oblomov
SAN FRANCISCO (MarketWatch) -- The dollar dropped across the board Friday, marking the seventh straight trading session in which it's sunk to a record low against the euro, after tame core inflation data suggested that the Federal Reserve has room to further cut interest rates. The euro was at $1.4270, after rising as high as $1.4277 earlier, well above $1.4147 in late U.S. trading Thursday. The dollar was buying 114.73 yen, down from 115.65 yen Thursday.
The dollar's drop accelerated after William Poole, the president of the St. Louis Fed, said in a speech that the central bank stands ready to cut rates again to keep the economy on a moderate growth track in the face of the financial market turmoil.
"My guess is that the inherent resilience of the U.S. economy along with future policy actions, should they be desirable, will keep the economy on a track of moderate average growth and gradually declining inflation over the next few years," Poole said in New York City.
Data released by the Commerce Department early Friday showed core consumer price inflation, which excludes food and energy prices, fell 0.1% in August, bringing core inflation over the past year down to 1.8%, the lowest since early 2004. See Economic Report.
"The greenback is under pressure across the board on Friday, as tamer core inflation data combine with U.S. slowdown concerns to weigh the unit down," wrote analysts at Action Economics.
The dollar has been in a tailspin against most of its major rivals since the Fed's surprisingly large, 50-basis point interest rate cut on Sept. 18, in a move aimed at preventing the subprime mortgage market meltdown from dragging down the broader economy.
(Excerpt) Read more at marketwatch.com ...
We exported so many jobs, our unemployment rate is 4.6%. We exported so many jobs, we have over 145 million employed.
How low would you like the dollar to go?
Who said I’d like the dollar to fall?
Well, you always seem to be finding the silver lining in our tanking dollar, so I was curious to know at what point will you finally admit that there might be a problem?
There are benefits to a strong dollar, there are benefits to a weak dollar.
so I was curious to know at what point will you finally admit that there might be a problem?
If a sudden drop in the dollar causes foreign investors to flee dollar denominated investments.
This one is from wikipedia:
“For the fourth quarter of 2004, according to OECD, (source Employment Outlook 2005 ISBN 92-64-01045-9), normalized unemployment for men aged 25 to 54 was 4.6% in the USA and 7.4% in France. At the same time and for the same population the employment rate (number of workers divided by population) was 86.3% in the USA and 86.7% in France.”
You really have to make an efford to be part of the US unemployment statistics.
I don’t have time to research the numbers, but I thought one of you might have this answer at your finger tips.
Do these import/export numbers include fuel (oil, gasoline, diesel, Nat Gas, etc)?
If so, what is our trade balance without the fuel number included?
What is it if we used the price of oil from 10 years ago?
Thanks,
Chris
Do these import/export numbers include fuel (oil, gasoline, diesel, Nat Gas, etc)?
If so, what is our trade balance without the fuel number included?
I've likewise wondered that before but never had the time to research it. Following are the numbers from the Bureau of Economic Analysis:
TRADE DEFICIT IN GOODS VS. PETROLEUM PRODUCT IMPORTS (billions of dollars) Imports of Deficit Imports Exports Deficit petroleum % of w/o petro Year of goods of goods of goods products deficit products ---- --------- --------- --------- --------- --------- --------- 1978 176.0 1420.8 33.9 42.6 125.4 -8.6 1979 212.0 1844.4 27.6 60.4 219.2 -32.9 1980 249.8 2242.5 25.5 79.5 311.8 -54.0 1981 265.1 2370.4 28.0 78.4 279.7 -50.4 1982 247.6 2111.6 36.5 62.0 169.8 -25.5 1983 268.9 2018.0 67.1 55.1 82.1 12.0 1984 332.4 2199.3 112.5 58.1 51.6 54.4 1985 338.1 2159.2 122.2 51.4 42.1 70.8 1986 368.4 2233.4 145.1 34.3 23.6 110.8 1987 409.8 2502.1 159.6 42.9 26.9 116.6 1988 447.2 3202.3 127.0 39.6 31.2 87.3 1989 477.7 3599.2 117.7 50.9 43.2 66.8 1990 498.4 3874.0 111.0 62.3 56.1 48.7 1991 491.0 4140.8 76.9 51.7 67.2 25.2 1992 536.5 4396.3 96.9 51.6 53.2 45.3 1993 589.4 4569.4 132.5 51.5 38.9 81.0 1994 668.7 5028.6 165.8 51.3 30.9 114.6 1995 749.4 5752.0 174.2 56.0 32.2 118.1 1996 803.1 6121.1 191.0 72.7 38.1 118.3 1997 876.8 6783.7 198.4 71.8 36.2 126.7 1998 918.6 6704.2 248.2 50.9 20.5 197.3 1999 1031.8 6839.7 347.8 67.8 19.5 280.0 2000 1226.7 7719.9 454.7 120.3 26.5 334.4 2001 1148.2 7187.1 429.5 103.6 24.1 325.9 2002 1167.4 6824.2 485.0 103.5 21.3 381.5 2003 1264.3 7134.2 550.9 133.1 24.2 417.8 2004 1477.1 8075.2 669.6 180.5 27.0 489.1 2005 1681.8 8946.3 787.1 251.9 32.0 535.3 2006 1861.4 10231.1 838.3 302.4 36.1 535.8 Source: Bureau of Economic Analysis, U.S. International Transactions Accounts Data, Table 2a and Table 2b
As you can see, the total value of petroleum product imports was just about 36 percent of the trade deficit (in goods) in 2006. Put another way, if we had been given all of our petroleum product imports for free, we would have still run a $536 billion dollar trade deficit. Hence, we cannot blame the trade deficit on the high price of oil. Of course, our dependence on imported oil may have costs beyond the direct cost to the trade deficit. Some suggest that the war in Iraq is one of those costs. But the trade deficit cannot be directly blamed on our dependence on imported oil, much less its current high cost.
When the treasury TIC flows have fallen below Federal spending, the federal deficit will explode. Then watch out below.
BUMP
Thank you very much for that chart.
Excellent post. But I think your imports of goods column is wrong. Thanks.
Oops, exports of goods. Decimal in the wrong place.
Oops, exports of goods. Decimal in the wrong place.
You're right. In my spreadsheet, I divided by 100 instead of 1000 to convert from millions to billions. Thanks for catching the error. I'll repost the corrected table below:
TRADE DEFICIT IN GOODS VS. PETROLEUM PRODUCT IMPORTS (billions of dollars) Imports of Deficit Imports Exports Deficit petroleum % of w/o petro Year of goods of goods of goods products deficit products ---- --------- --------- --------- --------- --------- --------- 1978 176.0 142.1 33.9 42.6 125.4 -8.6 1979 212.0 184.4 27.6 60.4 219.2 -32.9 1980 249.8 224.3 25.5 79.5 311.8 -54.0 1981 265.1 237.0 28.0 78.4 279.7 -50.4 1982 247.6 211.2 36.5 62.0 169.8 -25.5 1983 268.9 201.8 67.1 55.1 82.1 12.0 1984 332.4 219.9 112.5 58.1 51.6 54.4 1985 338.1 215.9 122.2 51.4 42.1 70.8 1986 368.4 223.3 145.1 34.3 23.6 110.8 1987 409.8 250.2 159.6 42.9 26.9 116.6 1988 447.2 320.2 127.0 39.6 31.2 87.3 1989 477.7 359.9 117.7 50.9 43.2 66.8 1990 498.4 387.4 111.0 62.3 56.1 48.7 1991 491.0 414.1 76.9 51.7 67.2 25.2 1992 536.5 439.6 96.9 51.6 53.2 45.3 1993 589.4 456.9 132.5 51.5 38.9 81.0 1994 668.7 502.9 165.8 51.3 30.9 114.6 1995 749.4 575.2 174.2 56.0 32.2 118.1 1996 803.1 612.1 191.0 72.7 38.1 118.3 1997 876.8 678.4 198.4 71.8 36.2 126.7 1998 918.6 670.4 248.2 50.9 20.5 197.3 1999 1031.8 684.0 347.8 67.8 19.5 280.0 2000 1226.7 772.0 454.7 120.3 26.5 334.4 2001 1148.2 718.7 429.5 103.6 24.1 325.9 2002 1167.4 682.4 485.0 103.5 21.3 381.5 2003 1264.3 713.4 550.9 133.1 24.2 417.8 2004 1477.1 807.5 669.6 180.5 27.0 489.1 2005 1681.8 894.6 787.1 251.9 32.0 535.3 2006 1861.4 1023.1 838.3 302.4 36.1 535.8 Source: Bureau of Economic Analysis, U.S. International Transactions Accounts Data, Table 2a and Table 2b
I would be cautious in using those figures. Over the years, I watched the Chicoms dismantle a hugh steel mill and several plywood plants here on the West Coast. Those are obvious ‘capital goods’ which also represent loss of employment etc etc.
As can be seen, the petroleum and products deficit makes up less than a third of the trade deficit but is just a little less than the deficit in Industrial supplies & materials, the end-use category of which it's a part. As a percent of GDP, it's actually slightly smaller than it was in 1979 through 1981. In any event, the deficit in other consumer goods (other than food and automotive) is slightly larger than petroleum and the deficit in automobile vehicles, engines, and parts is about half as large.
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