by MrBill » Thu 21 Feb 2008, 09:40:48
Freakoil wrote:
$this->bbcode_second_pass_quote('', 'D')o you think that a falling dollar will have any positive effects like a rebound in manufacturing? Some other posters and I discussed it briefly at this thread:
U.S. manufacturing rebound
I would be interested in your opinion.
And it's definitely time to make some hard choices. I've been waiting for a presidential candidate to say the word "sacrifice."
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US exports are at record highs due to a weaker US dollar and a stronger euro who are the main competition.
JAN US exports vs. DEC
Goods 1037.50 billion vs. 1031.4 bio +2.4% YOY
Services 418.0 billion vs. 410.4 bio +7.5% YOY
Total 1455.5 billion vs. 1441.8 bio +3.9% YOY
US exports
JAN US imports vs. DEC
Total 1975.90 billion vs. 1974.30 bio +0.30% YOY
US imports
JAN NET XPTS/MPTS vs. DEC
Total -520.4 billion vs. -533.5 bio -3.6% YOY
So you see that exports are rising faster than imports due to a weaker US dollar, but the
JAN import price index is +12.7% vs. +10.4% in DEC,
so that weaker US dollar is also importing inflation.
Source: Bloomberg
The problem that I would see is that some components of exports such as aircraft tend to skew the results, and I am not sure how many Boeing Dreamliners that America can export? Anecdotally, there appears to be a glut of used aircraft on the market, and if the global economy slows down, so will air travel, and therefore that export segment as well.
But as the US runs a current account deficit (trade deficit + budget deficit + balance of payments on interest and dividends paid abroad) that is a net wealth transfer from the domestic economy to foreign trade partners and creditors. That is a long-term drag on growth that can only be offset by FDI into America.
But that means allowing more foreign ownership of American assets and not just increasing foreign held debt.
The organized state is a wonderful invention whereby everyone can live at someone else's expense.