| Economics: Manufacturing: Trade Balance |
Overall US trade balance (the difference in dollar amounts between United States imports and exports) from 1998-2007.
U.S. Durables Rise in February
Published Wednesday, March 25th, 2009
A new Commerce report indicates that orders for U.S. durable goods has risen unexpectedly 3.4% in February on the demand for machinery, computers, and defense equipment. This is the biggest increase in a year and the first in seven months according to the Commerce Department. This report also stated that there are some improvements in retail sales, including residential construction and home sales. Buyers seeing deals in the housing market are driving sales up 4.7%. On the back of this news, stock index futures rose and treasury yields were up two base points from yesterday. Some experts see this as an indicator of economic recovery.
The growth of the Real GDP, the size of an economy adjusted for price changes and inflation, has been slowing for a number of years. As of 2007, the Real GDP only increased 2.0% and in 2008 the GDP increased 1.1%. Contributing to the growth slowdown is the negative trade balance which actually shrank for the second year in a row from its sharp decline. As the recession grew, Americans bought fewer imports, which normally would be a good thing. However, at the same time, the rate of change in US exports also declined (not as great as imports hence the negative shrinkage) as the annual rate in change for export totals narrowed from $15.4 billion increase in 2007 to $1.3 billion increase in 2008.
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Trade Balance Lessens as Oil Imports Fell
Published Thursday, November 13th, 2008
News regarding the latest moves of the trade balance is not good nor is it wholly bad. Factors involved in the narrowing of the gap involve a 6% drop in exports, the most since September 2001, to $155.4 billion. Exports to the European Union were the lowest since December 2007, partially influenced by the dollar’s 17% jump from mid-July to the end of October, reaching the highest level in two years. A stronger dollar makes goods overseas more expensive and lessens exports. More importantly, the trade gap with China, our largest exporter of American-made goods, increased to a record $27.8 billion as imports to the U.S. jumped. As for the Imports side of the gap, a record decline in the cost of foreign crude oil caused fuel imports to tumble, thus decreasing the level of imports into the country. The gap is still negative but less negative than before.
The definition of a Trade Balance is the difference in value over a period of time of a country’s imports and exports of merchandise; “a nation’s balance of trade is favorable when its exports exceed its imports” (i.e., Trade Balance = Exports – Imports). Imports showed the steepest drop on record of 5.6% to $211.9 billion while exports fell by the biggest amount since September 2001, a drop of 6.1% to $155.4 billion. This has shrunk the trade gap by 4.4 percent to $56.5 billion.
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U.S. Trade Balance, by Partner Country 2006 - http://www.bls.gov/cpi/home.htm
The United States International Trade Commission(Commission) is an independent, quasi judicial Federal agency with broad investigative responsibilities on matters of trade.
Manufactoring.gov - http://www.manufacturing.gov/index.asp
The Manufacturing.gov website is dedicated to providing the most comprehensive, and current information on issues surrounding the competitiveness of American manufacturers and service industries.