2007 — The Year of the Shrinking Trade Deficit

By February 14, 2008Trade

The Commerce Department reported today that exports surged $2.2 billion in December while imports declined by the same about. This positive news mirrors much of what happened throughout 2007. Thanks to a realigning dollar, solid growth overseas, and a moderating U.S. economy, exports grew fast than imports in 8 of the 12 months last year.

One result of this positive trend is that, for the first time in six years, the trade deficit actually declined in dollar terms last year. After reaching a level of -$758 billion in 2006, the trade deficit narrowed by 47 billion to a level of -$711 billion last year. This is the biggest improvement in the U.S . trade deficit in sixteen years.

What’s impressive about the improving trade situation is that for a second consecutive year in a row, U.S. exports outpaced imports:
(1) in every major product category (capital goods, consumer goods, industrial supplies, automotive parts, and foods, feeds and beverages), and
(2) with every major location in the world in 2007 (North America, South/Central America, Europe, and Pacific Rim nations.)

With three free trade agreements awaiting action up on Capitol Hill, lets hope our country’s lawmakers will see the wisdom of reducing trade barriers overseas. After all, exports are helping our economy avert a recession right now. And more of a good thing should always be welcomed.

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