Trade Deficit Down $1.2 Billion from July - $30.7

The August 2009 international trade in goods and services report was released today. Anything that reduces the U.S. trade deficit to me is good news.

September Trade 2009


August exports of $128.2 billion and imports of $158.9 billion resulted in a goods and services deficit of $30.7 billion, down from $31.9 billion in July, revised. August exports were $0.2 billion more than July exports of $128.0 billion. August imports were $0.9 billion less than July imports of $159.8 billion.

The so-so news is that U.S. exports in goods remains unchanged, but exports in services did increase by $200 million. Services are only $11.2 billion in comparison to goods, which are the dominant element in trade: $41.9 Billion. Imports are decreasing, (a sign the U.S. consumer economy is slowing) and the main reason the trade deficit shrank. Goods imports dropped by $800 million and services imports dropped by $100 million.

Don't get your panties all blown out on this, services imports (think outsourcing as part of this) is still $30.2 billion.

U.S. capital goods (think finance) lead the export decrease by $1.3 billion. Imports decreasing are industrial supplies and materials, another ominous sign for U.S. manufacturing.

The increase in services exports were travel, freight and my favorite, professional services.

In Wholesale Trade and Inventories we have sales up 1.0% (don't get too excited, that's a 0.5% error margin), from July 2009 but still 17.7% below August 2008 levels.

Wholesale inventories just cannot get off the ground. They are down 1.3% from July and still down 14.7% for the year.

The chart for sales to inventories ratio is below. Are we there yet? (in terms of a recovery). Uh, no, in spite of all of the economic cheerleading.

wholesale sales, inventories ratio, August 2009

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There are some benefits to a weaker dollar

yeah but

well, firstly it's not really affecting the trade deficit from this data.

Secondly, it will mean Americans are now so broke there is no reason to import because they can no longer afford those cheap crappy goods from overseas.

(how many plastic bins do you need?)

It would be much better if China was forced to stop manipulating their own currency. That was proved to be the primary cause of the 83% of the total U.S. non-oil trade deficit.

some thingies to read on global trade

Firstly is this VoxEU post on global industrial output. They are saying it's tracking the Great Depression.

and there is also a big brew ha ha on "income elasticity" as in foreigners getting our jobs is what I think they really mean and that's the "magic cause" on global trade collapse.

So, the claim is that when foreigners don't get our jobs through offshore outsourcing, the global trade equation collapses.

Now over at Econbrowser, he's doing the math and finding no such correlation.

What I find interesting is that since the U.S. is the biggest importer nation, maybe it's because Americans are tapped out....and that is where the correlation arises. I could not find a breakdown by nation-state in these posts...
so ya know, "global income" means ??? in terms of trade imbalances. Obviously this is a to be understood.

I want to point out something in this IMF document Global Prospects and Policies

Rising unemployment will present a major challenge in many advanced economies. Chapter 4 suggests that unemployment rates tend to rise significantly and for many years after financial shocks, and this time will be no exception. Limiting the extent of job destruction will require slower wage growth or even wage cuts for many workers. The impact of the necessary adjustments on poorer segments of labor forces could be cushioned with earned income tax credits or similar programs that limit the social repercussions of wage adjustment. Subsidizing part-time work to facilitate a broad distribution of reductions in labor input and allow a more gradual reduction in wages may also be appropriate, provided there are reassurances that such programs are cut back as good times return.

Are you reading this? Basically they are saying it is policy to destroy the U.S. middle class in order to wealth transfer our income and jobs to emerging economies.

Seriously. Read it and tell me you don't get the same message.