What We Need Is Another “Free Trade” Agreement To Fix This!!!!

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Keep your eye on the ball.  Read this and see if you can’t find a reason for the current push for yet another “free trade” agreement …….

Current account trade deficit widens to $113.3 billion

WASHINGTON (AP) — The deficit in the broadest measure of U.S. trade increased in the January-March quarter to the highest level since the spring of 2012 as American exports declined.

The Commerce Department said Thursday that the deficit in the current account increased to $113.3 billion in the first quarter, up 9.9 percent from a fourth quarter deficit of $103.1 billion. It was the largest imbalance since a $118 billion deficit in the second quarter of 2012.

The current account tracks not only trade in goods and services but also investment flows. For the first quarter, the trade deficit increased as exports of goods fell to $382.7 billion from $409.1 billion.

Part of that decline reflected falling oil prices. But American exporters have also been hurt by a stronger dollar, which makes their products more expensive overseas.

The Federal Reserve took note of the weakness in exports in its policy statement Wednesday, saying it was one of the factors holding back the overall economy this year.

A bigger trade deficit subtracted nearly 2 percentage points from growth in the first quarter, sending the overall economy into reverse with the gross domestic product falling at an annual rate of 2 percent in the January-March period.

The economy is expected to rebound in the April-June quarter with many economists forecasting growth of around 2 percent. The expectation is that strong employment gains will bolster consumer spending and drive faster overall growth.

I’ve more to say, but, I think the readers can probably state it better.

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4 Responses to What We Need Is Another “Free Trade” Agreement To Fix This!!!!

  1. gator69 says:

    2% growth! Woohoo! Do they hear themselves?

    • DirkH says:

      They just need to increase the money supply by 2 % while proclaiming a CPI of 0 %, that’s doable I think.

  2. Bruce of Newcastle says:

    I wouldn’t worry about it. Here in Oz we’ve had a humungous current account deficit forever. Decades and decades.

    That is because it is measured incorrectly. It should be a risked calculation (like a “real options analysis”), but for political reasons you can never do that.

    The current account deficit also includes foreign investment yields. At the moment you guys are like us – you are getting huge amounts of Chinese money coming in buying up rental real estate and other productive assets. That is because the ordinary Chinese capitalist is getting money out of China as fast as they can make it. We have the same here: a full 23% of all house sales in Sydney currently are going to Chinese buyers. Seriously. The Sydney house prices are off the planet – like US$800k for a median house anywhere, and $2M for a hovel within 10 mi of the CBD.

    Hot money. Before the Chinese you had the Russians, who we sadly didn’t have.

    Now the reason why this is not a problem is if you think about it all this inward investment is on trust. They are trusting that the US authorities will be less likely to steal it off them then their own Chinese authorities would if they kept it in the country.

    And that is an assumption.

    If there is a war, as some say could happen, between China and the US, every single Chinese owned asset will be confiscated. Bang goes decades of current account deficits overnight.

    • DirkH says:

      “If there is a war, as some say could happen, between China and the US, every single Chinese owned asset will be confiscated.”

      Interesting idea, you’re right, they did that to the Japanese and Germans they put in concentration camps. High times for FDR cronies.

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