The Census Bureau along with the United States Commerce Department’s Bureau of Economic Analysis today released the monthly trade deficit report. The deficit for January is pinned at $50.4 billion. Economic analysts had been anticipating a result of $48 billion. These new figures come after December’s report showed a deficit of $48.8 billion. The Exports at that time were $178.8 billion versus an import level of $227.6 billion. The increase in the figures from previous months and analyst estimates is disappointing. The jump seems to stem largely from an increases in the trade gap with China, up to 26 billion dollars. This is the largest deficit the US has seen since late 2008.
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The monthly figures for the trade deficit are not seen as important in themselves. Seasonal fluctuation and instability in temporal market are a volatile mix. The report is seen to provide an insight into how the economy is doing on a general scale along with the other key economic indicators when viewed along as a long term trend indicator. As long as the figures do not swing widely or trend too heavily in one direction or the other this figure does not destabilise the market. It is used as a proxy for international demand of American product and the import values are used to calculate the amount of buying of foreign product US consumers do.
Exports in this report are a much used indicator of the demand from outside of the United States and so are a great point of view on how the rest of the world is recovering and what their involvement in trade with the US is. This is a massively important figure when looking at export led growth sectors such as consumer electronics, manufacturing and pharmaceuticals. These sectors rely heavily on international markets to provide demand and are the backbone of boht the traditional economy and the new “smart economy”. Imports are an indicator of the strength of domestic demand which is used to see the quality of economic wellness at home. After employment figures released today were up and unemployment was unchanged many are seeing signs of a US recovery on the cards.