All:
Sorry for the site/server troubles we experienced today. Trust me, we were working hard to figure out what was going on. Still no solid answers on how to prevent it again. Hopefully we’ll know that soon. Part of it seems to have been due to a large influx of visitors that came to view the Crash Course in Spanish. I underestimated the demand by a wide, wide margin. My bad.
U.S. Economy: Trade Gap Widens Less Than Forecast
Aug. 12 (Bloomberg) — The U.S. trade deficit widened less than forecast in June, reflecting a second consecutive gain in exports spurred by a pick-up in economies around the world.
The gap increased 4 percent to $27 billion from $26 billion in May, which was the lowest level in almost a decade, Commerce Department figures showed today in Washington. Exports gained 2 percent, helped by stronger demand for goods such as semiconductors and aircraft engines, while imports rose 2.3 percent, led by a higher cost for oil.
Comments: I think it’s a great thing that the US has a vastly reduced trade deficit compared to last year. While this "bump" in exports and imports is potentially good news for those seeking an economic bottom, it’s worth noting that exports are down 22% and imports are down 31% on a year-over-year basis. This chart from Calculated Risk puts the entire move in better context:
The only problem with using the trade deficit as an indicator that "things have turned around" is that it is not dollar-adjusted, meaning that dollar weakness will make it appear like there are more imports and exports, when all that’s really happening is that more dollars are received and spent for the same volume of goods.
For example, if "Company A" exports four widgets last month and four widgets this month, but the dollar has fallen a few percent, the trade report will record this as a gain.
So I am not quite ready to say this is a slam-dunk sign of a bottom, but it is certainly a better result than we’ve seen in a long time, as far as trade activity is concerned.
by davos