The U.S. trade gap grew for the second month straight in April, reports Bloomberg.
“The gap between imports and exports grew 2.2 percent to $29.2 billion, in line with forecasts, from a revised $28.5 billion in March that was larger than previously estimated, Commerce Department figures showed today in Washington,” writes Shobhana Chandra for the news service.
One of the reasons why the gap widened was due to slumping exports.
CNNMoney reports that U.S. total exports fell 2.3% in April, while imports fell 1.4%. Exports have fallen eight out of the past nine months, while imports have dropped for the past nine months.
For several months prior, however, the trade deficit was narrowing as exports were more robust than imports, but now, the U.S. consumer is spending a little bit more than the rest of the world, and the trade gap is widening.
The Wall Street Journal notes, “The trade gap has been narrowing in recent months as the slowing U.S. economy has sapped demand for overseas goods, though it has widened two months in a row.”
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In fact, according to MarketWatch, there had been a striking decline in the trade gap over the past two quarters and this has kept growth from being worse than it was. “Only one year ago, the trade gap stood at $62.14 billion,” said the article.
That means that the U.S. recession could last longer, as the rest of the world struggles to recover.
Bloomberg suggests that this gap could widen later this year, too.
Imports may be first to rebound later this year as the U.S. economy begins to expand, while exports languish until a recovery takes hold among trading partners from Japan to Germany, widening the deficit further. That danger underscores Treasury Secretary Timothy Geithner’s call for other nations to implement stimulus and financial-rescue plans.
Editor Adam Lass of WaveStrength Options Weekly (WOW) says all stimulus money does is contribute to inflation.
“Positioning reports out of the Chicago Mercantile Exchange reveal that there were more bets against the U.S. dollar [during the last week of May] than at any time since the whole banking crisis began.”
It’s a dire situation, and Adam writes, “The only way we can avoid a massive tsunami of defaults that would make the current round of Wall Street failures and house foreclosures look like a frog hiccupping in a small pond, is to deliberately induce inflation rates between 6% and 12% for years to come.”
And that will boost anything denominated in dollars, like gold, oil, and grains. His WOW subscribers have been recommended to hedge, hedge, hedge, with these inflationary sectors.
He said, “Anyone involved in dollar trading knows it’s happening already. Just take a look at a dollar index chart and you can see that the wise guys are already bailing out.”
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