We learned Friday that the U.S. trade deficit rose from $38.3 billion
in November to $40.6 billion in December, as imports outpaced exports.
In 2010 as a whole, the overall trade deficit grew at its fastest rate since
2000 and the trade deficit with China hit a
record high. But what does that actually mean? The the news isn't all bad. Nor is it all
good. And some say this whole discussion boils down to one commodity:
oil. Here's our humble explainer:
- Exports Rose
AFP's Veronica Smith notes this. In December, she points out, exports rose
to their highest level since the summer of 2008, which will help President
Obama in his quest to double exports by 2015.
- Rising Imports May Signal Economic Recovery The Atlantic's Daniel Indiviglio explains
that an increase in imports suggests rising consumer and business demand, which can translate into higher sales for companies and more hiring.
- Trade Deficit Isn't 'Scorecard' for Global Trade
Cato's Daniel Griswold maintains that what's important is the total volume of trade,
and by that standard the U.S. is doing well: "As economies
expand, so does trade, both imports and exports. Exports help us reach
new markets and expand economies of scale, while imports bless
consumers with lower prices and more choices, while stoking
competition, innovation, and efficiency gains among producers."
- Trade Deficit Hinders Growth, Job Creation Americans may be shopping again, says
UPI's Peter Morici, "but too many dollars consumers spend go abroad to purchase
imports but don't return to buy U.S. exports. This leaves too many
Americans jobless and wages stagnant and the resulting slow growth
leaves state and municipal governments with chronic budget woes."
THE BIG QUESTION: IS THIS ALL ABOUT OIL?
Energy Costs 'Bleeding the Economy', argues economic consultant Joel
Naroff, as quoted by AFP. He observes that over 80 percent of the rise in import goods in December stemmed from crude oil, petroleum, and fuel oil purchases.
- Trade Deficit Would Have Improved Without Oil, points out
The Hill's Vicki Needham.
- Lower Oil Prices = Lower Trade Deficit, agrees
Raj C. Udeshi at 24/7 Wall St. He shows a graph indicating that the
trade deficit and oil prices have "moved in lockstep" in recent years.
If the U.S. wants to keep oil prices down, he says, it should
strengthen the dollar by ending the Federal Reserve's debt-buying
program or double down on alternative energy and energy efficiency.