US Trade Deficit Tiny But Still a Deficit and Still Moving Higher
The US trade deficit has slowed to $30 billion per month. In April, the deficit was even lower to $29.2 billion, helped by a drop in the imports of foreign goods and lower commodity prices. The problem however, is soon to grow larger, due to a variety of market fluctuations.
Oil Prices Are Headed Sky High
Oil prices will certainly lead the growing trade deficit. At $72 per barrel, oil is relatively cheap, still half the price of its bubble high. Energy is the number one issue crippling the economy, as each year the United States imports more than 5 billion barrels of oil, all of which brings money out of the US economy.
Trade Deficit Ruins Economy
Consider this. You’re bleeding, profusely and it can’t be stopped. It can be stopped but its difficult and requires the careful spending of some 305 million people. Doctors pump blood into your system, only for it to fall out of the wounds in your body.
That’s pretty much how the economy works. Doctors (the government) infused some 1.4 trillion through TARP and the stimulus packages, but at the current pace we’ll shed all of that money in just 4 years. The lifeblood of the economy, capital, is bleeding out of our borders and to the countries that supply us with goods, including cheap Chinese products and oil from the middle east.
Playing with the Numbers
We shed $29.2 billion in April, and that was with a $41 oil price. With the current price near $70, we’ll be paying 75% more for our oil and exporting even more dollars. Another 400 Million barrels of crude will be purchased at a price of $30 billion. So expect the deficit to rise to $45 billion per month, or $540 billion per year.
This deficit has to be fixed. We’re bleeding wealth and quickly. To fix this economy we need to cut back on our energy use and buy in the United States, support local businesses around us and do all we can to keep wealth here in the US.
