United States

US Trade Gap at Three-and-a-Half Year Low

Thanks to surge in exports

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The U.S. trade deficit narrowed sharply in June to its lowest level in more than 3-1/2 years as imports reversed the prior month's spike, suggesting an upward revision to second-quarter growth.

The Commerce Department said on Tuesday the trade gap fell 22.4 percent to $34.2 billion, the smallest since October 2009. The percentage decline was the largest since February 2009.

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  1. Tell me again what a trade gap is. Dollars sent out to buy products coming in have to balance dollars coming in from products sent out. No one will take our dollars and give us products unless they have a use for those dollars beyond wiping their arses. They must use those dollars to buy things from other countries, and that means they are either circulating around the world as extra, inflationary, local currency, or they are used to to buy things from the US, in which case they come back.

    Now maybe they use dollars to buy US treasury bonds. That implies they think US treasury bonds are a good reliable deal. Or they buy stock in private companies, which means they think private companies are a good deal.

    I really don’t know, I can only guess it is stocks and bonds which are not covered in the trade deficit figures, which only cover actual physical products, which is a nice cherry picking alarmist tactic we have seen a zillion times before.

    But there is no trade deficit as I understand it. If I am wrong, will someone please tell me where?

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