GOOD NEWS: ECONOMISTS WRONG ON TRADE
You want to do yourself and your bank account a favor? Ignore the predictions of so called experts. Economists are as bad as weathermen in predicting even the immediate future. This has been demonstrated yet again by the narrowing of the American trade deficit demonstrated regardless of their prediction to the contrary. Unfortunately, their errors cost us dearly as they result in counter productive economic policies directed at increasing American spending instead of encouraging American production.
At 8:30 this morning, the US Commerce department was about to release the trade data. So, throughout the morning Bloomberg radio repeatedly interviewed experts asking them to predict the numbers. They predicted a widening of the U.S. deficits because the price of oil has gone up and the U.S. may not be able to sell what it makes because of the strong dollar and the weakness of the global economy.
WRONG! Bloomberg was forced to report:Trade Deficit in U.S. Narrowed in May as Exports Rose in part because of a rise in aircraft sales following the two airbus disasters (some pilots reportedly are saying:"If it ain't Boeing, I ain't going")
The U.S. trade deficit unexpectedly narrowed in May to the lowest level in almost a decade as exports jumped while imports of crude oil and auto parts declined.
The gap between imports and exports decreased 9.8 percent to $26 billion, the smallest deficit since November 1999, from a revised $28.8 billion in April that was lower than previously estimated, the Commerce Department said today in Washington. Imports fell while exports rose the most since July 2008. . . .
“Trade looks like it’s going to be a big plus for second quarter GDP,” said James O’Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. “It looks like the plunge in exports is over, which is of course consistent with the goal of the economy starting to stabilize after a dramatic collapse.”
The trade gap was projected to widen to $30 billion, from an initially reported $29.2 billion in April, according to the median forecast in a Bloomberg News survey of 71 economists. Deficit projections ranged from $34 billion to $25.5 billion.
The dollar remained lower against the yen after the report, trading at 92.24 yen per dollar at 9:11 a.m. in New York, compared with 92.99 late yesterday. The dollar was at $1.3902 per euro from $1.4020.
Exports rose 1.6 percent, the biggest increase since July 2008, to $123.3 billion, as sales of petroleum products, chemicals and industrial machinery increased. Exports this year have gotten a boost from aircraft manufacturers. Chicago-based Boeing Co., the world’s second biggest commercial-plane maker, said it got 20 orders in May, up from 17 in April.
Imports fell 0.6 percent to $149.3 billion after decreasing the prior month. The import figures were held down by a decline in purchases of foreign crude oil to $12.9 billion from $13.8 billion, reflecting lower demand for petroleum even as prices rose. The cost of imported oil averaged $51.21 a barrel, up from $46.60 in April, according to today’s report. Oil prices have been falling since June 11.
Harvard Economist Kenneth Rogoff is right. Americans are facing a huge headwind not the least mistaken policies based on economists mistaken predictions, not to mention having to make business decisions in an anti-business atmosphere generated by a government determined to replace capitalism with socialism and the free market with a managed one.
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