Us Trade Deficit

In: Business and Management

Submitted By Elsage
Words 591
Pages 3
US Trade Deficit
1. How large is the US trade deficit (relative to GDP)?
As a percentage of U.S. GDP, the overall international trade deficit (including goods and services) was 3.7% in 2011, up from 3.4% in 2010. For the full year 2011 this equated to $558.0 billion, which included an overall deficit of $737.1 billion in goods, and a surplus of $179.0 billion in services.
2. How has the trade deficit changed recently? Why?
Clearly the deficit is up, which reflects some growth in consumer spending as the unemployment rate decline late in the year and output (GDP begins to grow). For the three months ending in December, exports of goods and services averaged $178.5 billion, while imports of goods and services averaged $224.8 billion, resulting in an average trade deficit of $46.3 billion.
The December 2010 to December 2011 increase in exports of goods reflected increases in industrial supplies and materials ($6.0 billion); capital goods ($2.2 billion); automotive vehicles, parts, and engines ($1.8 billion); consumer goods ($0.1 billion); other goods ($0.1 billion); and foods, feeds, and beverages ($0.1 billion).
The December 2010 to December 2011 increase in imports of goods reflected increases in industrial supplies and materials ($9.2 billion); capital goods ($4.7 billion); automotive vehicles, parts, and engines ($3.1 billion); consumer goods ($2.1 billion); foods, feeds, and beverages ($1.1 billion); and other goods ($0.3 billion).
3. Do you expect this trend to continue?
I believe the trend will continue until there is more income and wage parity with China. The disparity makes the manufacture of goods in China much cheaper than in the US, and hence the cost of products is also cheaper. There is little that the US manufactures that China consumers would be interested in.
4. Is this trade deficit a bad thing or a good thing, and why?

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