How Soaring U.S. Trade Deficits Effect You

In May, the U.S. Trade Deficit hit $50 billion for the month, the highest in 21/2 years. Why should you care?

If you are an American, because for every dollar the U.S. spends on foreign made goods and services, it is a dollar not invested in producing U.S. made goods and services. This means fewer U. S. jobs. It also means that if you travel outside the U.S. in many places, including Canada, you will find it very costly as the U.S. dollar is so weak vs. the local currency.

Now our jobs market is not recovering for many of its production jobs are gone and U.S. citizens can't afford to travel which hurts foreign economies. It is also bad for our trading partners from China to OPEC, and from Germany to Japan who due to our nation's rapidly mounting debts, must worry about the declining value of the money we pay them.

The good news in the weak U.S. dollar is that it has forced some foreign producers such as BMW, Toyota and Honda to manufacture more of their products here to protect themselves from a dollar continuing to weaken against their currencies. And it has made it cheap for their citizens to visit the U.S. which creates tourist oriented jobs here. Ironically, this is the reverse of the way it used to be when America was the most powerful manufacturing nation and ran the world's biggest trade surpluses.

Dick
To learn more about this, please see: "Wider Trade Deficit Lowers Some GDP Forecasts," The Wall Street Journal, http://online.wsj.com/article/SB10001424052702303678704576441620125553048.html