The same is true of macro economies. If I buy a widget from a company in Indonesia over a company in the US, it just means that I have extra money to purchase things American made.
However, these recent trade deficit figures have me concerned..............
The U.S. trade deficit unexpectedly widened in June by a record $7.9 billion as imports rose and shipments abroad declined.
The $49.9 billion gap was the biggest since October 2008 and followed a $42 billion shortfall in May, Commerce Department figures showed today in Washington. Exports dropped by the most in more than a year.
Stocks plunged after the report, extending a global slide, on growing concern the recovery worldwide was slowing as a report showed output in China cooled and the leader of the Bank of England said U.K. growth will be weaker than previously forecast. Today’s trade data also signaled the U.S. economy slackened more than currently estimated last quarter.
“We’re going to get less of a boost from exports in the second half,” said Aaron Smith, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania. “It’s consistent with slower global growth.”
Why do trade deficits bother me now? Because it's clear that we have collective demand for goods and services in this country. However, with unemployment hovering around 10%, you have to wonder how it is that none of these goods and services can be produced in this country.
Maybe it's because the costs of production is so high they can't be made in this country.
Just a thought.