Monday, August 3, 2009

U.S. Trade Balance

Below I've posted a chart of the US Trade Balance published in a BEA report, you can find the original here.

You can see that the balance turned up sharply in about October 2008 and maintained an upward trajectory until about February of this year where it seems like the trade balance has stabilized at about -$25B (at least through this May 2009 report). This corresponds roughly to the pattern of the US Dollar that rallied strongly into the end of last year and topped out around the beginning of March 2009.

Below is a longer term chart of the Balance of Trade, one can see that recent trends represent quite a shift in multi-year US foreign trade balances and if this trend is maintained, should have further effects on the markets.

1 comment:

Mike Norman said...

Yes, this is an enormous shift and in my opinion doesn't only reflect a temporary U.S. drop in consumption. Unemployment in the U.S. is higher than in other industrialized nations and incomes have suffered more, relatively speaking. China is embarking on an ambitious program of economic reform that aims to even out income disparities and sustain domestic consumption, while Europe has a broader and more far-reaching social support system. U.S. policymakers view the world rife with "imbalances" that have to be corrected--the U.S. trade deficit being one. Moreover, it is believed that exports are a safe and reliable path for creating domestic jobs. This is the new paradigm and it shows quite clearly that America's trade deficit is in secular decline, which will lead to a long-term advance in the dollar.