The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

Finally….Real Progress

10/20/2009

During the 1990s, our trade deficit averaged about 2% of GDP but started rising in 2000. In December of 2006, I wrote this was not sustainable and possibly dangerous, as it approached 5% of GDP. The latest figures show it has decreased to only 3% of GDP and hopefully still dropping.

One reason is the weakening dollar makes our imports more expensive and our exports cheaper for foreigners to buy from us. Another reason is that China’s trade surplus has decreased from 10% of GDP to only 6.5%. That’s progress . . . real progress!

We’re watching a fundamental realignment of the global economy. It will be bumpy, but the worst is behind us . . . and, that’s also real progress!

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