The widening US trade deficit

The latest US trade figures continue the trend this blog has been analysing since last year of the widening of the US trade deficit. This is shown in Figure 1, which charts monthly data for the US balance of trade, and Figure 2 which shows the monthly data calculated as a three month moving average in order to remove the effect of purely short term fluctuations. Both show that since May 2009 a clear and significant trend of widening of the US trade deficit has occurred - reversing the earlier improvement that took place after the first impact on US trade of the financial crisis following July 2008.

Taking figures, the monthly US trade deficit reached its narrowest point at $25.8 billion in May 2009. It widened to $39.7 billion by January 2010.Taking a three monthly moving average the monthly US trade deficit reached its narrowest point at $27.0 billion in June 2009. By February 2010 it had widened to $38.8 billion.

The fundamental trend to a continued widening of the US trade gap as its economy starts to recover from  recession is clear.

Figure 1

Figure 2

Comments

[John Doe III]

Somehow it appears that this is a common pattern in history. A long prosperous dynasty that had developed all sorts of rigidity that cannot be overcome by a wholesale reset. The Washington dynasty had given us much more than many others in history, but at this point in history it appears that we are reaching the beginning of the end.

[Fibocycle]

It is amazing the 'sensational U.S. recovery' is being fueled by the same shenanigans that led to the 2008 crisis. An economic recovery that is made possible by incurring further debt will inevitably have a lamentable ending. At some point the lack of regulatory and moral accountability and the callous disregard of rational economic principles will come home to roost.