Trade Deficit At Record High: What Does That Mean?

Trade Deficit At Record High: What Does That Mean?

On a day-to-day basis, most of us don’t concern ourselves with the details of macroeconomics other than to glance at the latest recession news over morning coffee. But macroeconomics—the workings of our national economy—do affect our daily lives. We’re only as financially healthy as our country, and (as we’re all too aware) our current health is failing.

U.S. Trade Deficit At Record Expansion

The latest symptom is an enormous, increasing trade deficit. “Trade deficit” means that we’re importing more than we’re exporting; we’re buying more than we’re selling. The opposite would be a trade surplus, where exports would exceed imports. The U.S. started recording numbers in 1992, and Bloomberg reports that the deficit’s largest expansion since then occurred (to $49.9 billion) this past June.

Imports Vs. Exports

Economists theorize that the slowdown in exports is consistent with the slowdown of emerging markets such as China—as their growth levels out, they need less from outside sources. The increase in imports is affected by (hold your breath!) oil. But apparently, other countries may be inclined to purchase more from the U.S. now that the value of the dollar has weakened… at least someone is benefitting.

It’s All About Perspective

Trade on a global scale isn’t all that different from the trade of cash for cashmere sweaters. When it comes to earning, spending, and saving, we know that getting into debt is the ultimate sabotage for the future. In macroeconomics, there is a lot more money at stake. Communication across time zones and language barriers is a little trickier than buying some groceries, but the same principal remains: spend more than we make, and we’ll be in some serious trouble.

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