United States economists used past statistics to project a .4 percent increase in import prices for the month of October. However, these prices only increased by half of that at .2 percent. This followed a .7 percent increase in prices in the month of September. There are multiple factors that contributed to this decrease. Firstly, the prices of imported petroleum and imported capital goods both increased at a similar rate to previous months. Large decreases in the prices of imported food counteracted these increases and left overall prices at a decreased growth rate. At the same time, growth rates of exports remained constant.
These price changes could have positive and negative impacts on the US economy. Increasing import prices on capital goods will influence firms to invest more domestically, benefiting firms producing in the US. On the other hand, decreasing prices for imported food will hurt US agriculture and food production. This should also theoretically decrease growth of net exports as prices of imports are decreasing with no change in prices of exports.
https://www.cnbc.com/2017/11/16/us-import-prices-oct-2017.html
Due to the reduction in net exports, the currency will obviously have a higher value. I am sure this will not continue because if it does our trade balance will get worse and worse despite the strengthening of our currency. Do you think the US government would prefer a strengthened currency or a better trade balance?
ReplyDeleteA strong currency makes a country's exports more expensive, hurting that nation's trade competitiveness. A weak currency makes imports more expensive, boosting domestic inflation.
DeleteI also believe that this would hurt domestic goods and services that are more expensive in comparison to imported goods and services. If that surely is the case, then President Trump's mantra of increasing American manufacturing for US consumption, then he faces a tough challenge to keep people's loyalty to American goods and services.
ReplyDelete