Tuesday, March 11, 2008

Good News...The Trade Deficit Wasn’t As Bad As Expected

I saw the headlines in the news today and couldn’t help but laugh. It appears that people are so desperately seeking positive economic news that they will cling to anything which can remotely be skewed into a positive light.

While it certainly is good news that the trade deficit came in better than expected, and that exports improved, people are forgetting a couple of important things: it still grew, and the deficit was $58.2 billion for January! Yes, folks...I said $58.2 billion U.S. dollars, not Japanese Yen, for the month of January. That was an increase of .6 percent over December’s trade deficit of $57.9 billion, according to Bloomberg.

When I look at those numbers, I certainly do not get a warm, fuzzy feeling. I get further indication of the shakiness of the U.S. economy. Despite the fact that the dollar has been beaten to death against the world’s other major currencies, we still can’t chip away at our trade deficit. If not for the ridiculous price of oil, it appears that things would have turned out a little better, but that is beside the point. Oil is our biggest import, and it isn’t going to go away anytime soon. Therefore we have to account for that.

If I just ruined your day by spoiling this shred of hope, I sincerely apologize. I’ll tell you this, though: It was just announced that the Fed is going to issue $200 billion in new loans to the struggling banks, and the Dow is up almost 200 already. Oh, shoot...I just saw that the Fed is allowing them to secure those loans with mortgage securities. Hmm...that should be interesting.

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