April 12, 2006
The Deficits Move in Opposite Directions -- For Now
The dollar touched a more than one week high against the euro and strengthened versus the yen after the U.S. trade deficit narrowed more than forecast in February. The trade gap, the amount by which imports exceed exports, fell 4.1 percent $65.7 billion from a record $68.6 billion in January, led by a decline in Chinese imports...
A separate report showed the U.S. budget deficit gap widened last month to $85.5 billion in March, from $71.2 billion in the same month last year.
So, one deficit rises and the other falls? Maybe not. Both Brad Setser and The Nattering Naybob point out that China's trade surplus grew in March, on a strong expansion in exports. And Menzie Chinn notes that the March (and April) surge in oil prices does not bode well for sustaining the February decline in U.S. imports. The guessing is that when the March trade numbers are revealed, the two deficits may look like twins again.
UPDATE: The Skeptical Speculator also makes reference to the March surplus in China, among many other things.
TrackBack URL for this entry:
Listed below are links to blogs that reference The Deficits Move in Opposite Directions -- For Now: