Link
The United State's trade deficit increased slightly in the month of January as imports and exports both increased 0.6%. Due to the fact that imports are already larger than exports, the same percentage increase leads to a larger quantitative increase in the import sector. The increase in the trade deficit tells us that U.S. companies are making less abroad compared to what foreign companies are making in the United States. This also means that the world interest rate is higher than the current interest rate in the U.S. market, leading to the increase in foreign investment. Though, the trade deficit is increasing, the rate at which it increases is beginning to decline. One major reason for this is the development of the domestic energy sector. The U.S. is having to import less resources and can increase its energy exports with the recent increase in domestic energy production.
Do you think there are any things the United State's should do now to try and reduce the deficit? Or is the fact that the rate is slowing currently enough to let it continue for now?
ReplyDeleteIf we ever hope to increase US exports we need to do something about the large trade deficit. It is a positive sign that the margain of increase is declining. However it is more important to decrease the deficit as a whole. There should be more government sponsorship in the areas of domestic energy because it has helped to lower the deficit already. Money filtered into these projects and others will help push for higher domestic economic growth.
ReplyDeleteWith the increase in domestic energy production, prices of energy sources such as oil and natural gas will decrease. This will lower the average price levels of a lot of goods and services which will decrease the cost of living. As a result, this will improve the living standards in the United States in the long run as well as decreasing unemployment due to the increase in DOMESTIC energy productions. These are both main issues the Fed are to address.
ReplyDelete