Trade Deficit in U.S. Shrinks as Exports Climb to Two-Year High

Source: Bloomberg

The trade deficit in the U.S. narrowed more than forecast in September as a drop in the dollar pushed exports to the highest level in two years.

The gap shrank 5.3 percent to $44 billion, smaller than the $45 billion median estimate of economists surveyed by Bloomberg News, Commerce Department figures showed today in Washington. Exports increased 0.3 percent on foreign demand for aircraft, generators and foods, and imports fell.

A flagging dollar is making American goods cheaper overseas as demand in emerging economies propels international sales for U.S. exporters line General Electric Co. Foreign products, in turn, are becoming more expensive for U.S. buyers, signaling the trade deficit will keep narrowing in coming months and contribute to gross domestic product for the first time in a year.

“Exports are probably going to be supported by the weaker dollar,” said Ed Kashmarek, an economist at Wells Fargo Securities LLC in Minneapolis, who projected the gap would drop to $44.1 billion. “The weaker dollar is also going to detract a little bit from imports.”



Read more: http://www.bloomberg.com/news/2010-11-10/trade-gap-in-u-s-shrinks-as-exports-climb-to-highest-level-in-two-years.html

No offense intended for the originator of this thread, but we must have been born last week. Been reading this faux cheerfulness since the 90's. Seems every time the trade deficit makes the smallest of drops in an otherwise gigantic upward trend, corporatists ballyhoo this as absolute proof of the solidity of our present system. Of course as soon as it resumes its normal upward course, the trade deficit doesn't even matter anymore: It'll be about "cheap products for consumers".

Unfortunately, it's common for the same people who lament our lagging exports to lament a declining dollar, without ever understanding the correlation.