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Rising Exports Putting Dent in Trade Gap

Adux

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Rising Exports Putting Dent in Trade Gap


By JEREMY W. PETERS
Published: May 14, 2007
Over half of the 9.1 million vehicles General Motors produced last year were sold in foreign countries. More KFC fast food restaurants are opening in China now than in the United States.

With the slumping housing market taking a toll on its business at home, Caterpillar is counting on sales of equipment and diesel engines in Europe, Asia and the Middle East to keep growing.

American companies have been doing business abroad for a long time, but never before has it been so important. This year, for the first time, Standard & Poor’s expects the 500 companies in its benchmark stock index to generate more than half of their sales in foreign countries.

Even as companies in the United States are gaining ground overseas, they are also sending more American-made products abroad. A weaker dollar is adding to their good fortunes, helping to make American goods and services more competitive in foreign markets.

As a result, it now looks as if the huge trade deficit, which swelled to a record $765.3 billion last year, could gradually decrease. The trade gap widened in March, mostly because of higher prices for imported oil, but the vast disparity between what Americans import and export is expected to narrow, which would allow trade to contribute to economic growth in the United States for the first time in more than a decade.

The shift to a more export-driven economy, if it continues, could add more jobs at home and help the United States bounce back from its slowest economic expansion in four years.

When the trade deficit shrinks, “home-grown demand is being fed by home-grown production instead of foreign production,” said Chris Varvares, the president of Macroeconomic Advisers, an economic research firm in St. Louis. “That requires more domestic employment, and that’s better for the domestic economy.”

Faster growth in Europe and Asia is helping to cushion the blow of a collapsing housing boom that has hampered domestic consumer spending, creating more demand from elsewhere for goods and services made in the United States.... (more)

http://www.nytimes.com/2007/05/14/bu...dollar.html?hp
 
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Please can you give me Why it is a stupid analysis?
 
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I wish I was done with university so that I could buy a house, since everyone keeps going about the housing slump. Though houses where I live are an insane price, you should expect to shell out about a $1 million on a regular home in Fairfax County. I guess that's because it is the richest county in the United States :tongue: :usflag:

And I'm glad the trade deficit is expected to close, I do live in the US afterall so I don't want unemployed people mugging me :D
 
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Why is not anybody over here talking about a weak dollar?
 
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I am a CFA 1st level ..... That CPA is too boring and tough for me, Accountants dont get women...lol

Watch Americans play the same game with Chinese, Weaker Dollar - Higher Exports - Closing Trade Deficit. I really wanna see Americans play the same game with Chinese, Both keeping their value artifically low. I would bet on the Americans, Being the Founders of Capitalism should have the advantage in IMO. RBI is trying hard to Keep the Ruppee to Dollar above 40 ruppees here. I could be wrong,
Whats your take.
 
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The other side of the coin is that a weaker dollar would hurt the earnings of oil exporting countries who denominate their oil in dollar. Thats something US has to be bothered about. Although its tru that other than Venenzula and Iran nobody has spoken about qotuing oil in euros, its not a possibilty. Especillay if you see the sabre ratling of russia.
 
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Iran and Venzuela has their political reason, otherwise it dosent make economic sense to use the Euro, when Dollar is so widely used. Americans are really bothered about the Trade Deficit, The fastest way for them is to deperciate the dollar just about enough, so not to cause wide panic, but at the same time making their exports more competitive, They havent weakened it to a well where Oil countries will go nuts.
The best thing for American Economy (not world) in the short term is Chinese going to war with Taiwan.. Burn those I owe You Treasury Notes...lol

I find these times very interesting, I had interesting chat with Bank Manager regarding this yesterday..I gotta read up more, I am really back on data now a days.
 
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Iran and Venzuela has their political reason, otherwise it dosent make economic sense to use the Euro, when Dollar is so widely used. Americans are really bothered about the Trade Deficit, The fastest way for them is to deperciate the dollar just about enough, so not to cause wide panic, but at the same time making their exports more competitive, They havent weakened it to a well where Oil countries will go nuts.
The best thing for American Economy (not world) in the short term is Chinese going to war with Taiwan.. Burn those I owe You Treasury Notes...lol

I find these times very interesting, I had interesting chat with Bank Manager regarding this yesterday..I gotta read up more, I am really back on data now a days.

US cant make an impact on trade deficit unless they let the $ depreciate significantly. Would US do that? I guess not, atleast not willingly.

The thought that a falling dollar has not rang any alarm bells is wrong. Most of the countries have started converting to other assets, albiet miniscule % or atleast started their work on the process.

India would have lost a considerable % of their foreign reserve in value only due to the dollar depreiciation in the last month alone.

Dollars fall i sdefinitly alarming, but the fact is that its more alrming for China more than US itself as China holds a damn lot of treasuries in US$. If $ keeps on crashing China is going to end up paying US for buying US bonds!!!
 
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Bull,

They are not looking at short- short term strategy. Play with the dollar and the world economy will tumble. What they are looking at is to force the Chinese to devalue their currency; so that dollar comes up to its real value as well yuan comes up to its. The depericiation will never be significant in dollar terms, but in yuan terms it becomes more significant, therefore Chinese exports become more expensive when US products become competitive.
A major Dollar de-valuation will direct impact on the Euro, They are too well-integrated.....It really doesnt matte than much how you keep your reserves, unless the American Economy collapses, which will make the world economy collapse. Chinese are the one's who are in most trouble over here, They didnt expect George Bush to make 5 trillion dollar surplus into 8 trillion dollar deficit
 
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Adu,
i have got a good report with me, its PDF file. But dont know hw to upload it here.

Can anybody help???
 
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