No improvement in trade deficit means US economic recovery will have to depend on domestic growth
February’s US trade deficit of $45.8bn was worse than the average forecast of $44.3bn. January’s deficit was also revised upwards to $47.0bn from the previous estimate of $46.3bn. However little should be read into a single month’s figures and more important is the trend.
This confirms that the period of improvement in the US trade position which began after the international financial crisis has ended. The US trade deficit reached its lowest point in May 2009, at $24.9bn, deteriorated to $50.0bn in June 2010 and since then has remained in a range from $38bn – $47bn – see Figure 1.
Taking a three monthly moving average, to smooth out purely short term fluctuations, shows the same pattern – see Figure 2.
This stagnation of the trade position means that the period of positive contribution to US GDP growth from an improvement in the net trade position is also no longer operating – contrary to the hopes of the US administration. Unless there is a dramatic improvement in the trade position in March, which on present trends appears unlikely, the speed of growth of US GDP in the the 1st quarter of 2011 will therefore depend entirely on domestic factors.
Looking at the medium term, a pattern of US GDP growth which is dependent only on domestic factors is more vulnerable to the fiscal tightening which the Republican majority in the House of Representatives is pushing for – and with which the Obama administration appears likely to make significant compromises. The February trade figures therefore tend to shave estimates of US economic growth downwards.
Figure 1
Figure 2
John Ross is currently Visiting Professor at Antai College of Economics and Management,Shanghai Jiao Tong University, where he leads research on globalisation and on China and the international financial crisis.
Check out his blog: http://ablog.typepad.com/keytrendsinglobalisation/ , or follow him on twitter @JohnRoss43
Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.
"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.
Please Help Support BeforeitsNews by trying our Natural Health Products below!
Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST
Order by Phone at 866-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST
Order by Phone at 866-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST
Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!
HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation.
Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.
MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)
Oxy Powder - Natural Colon Cleanser! Cleans out toxic buildup with oxygen!
Nascent Iodine - Promotes detoxification, mental focus and thyroid health.
Smart Meter Cover - Reduces Smart Meter radiation by 96%! (See Video).