Economists have recently started to talk about the U.S. trade deficit being at a decade high of $796 billion dollars. According to Wikipedia, the balance of trade, commercial balance, or net exports (sometimes symbolized as NX), is the difference between the monetary value of a nation’s exports and imports over a certain period. In short, there is either a plus or a minus, and the U.S. has historically suffered from a deficit platform.
Not all countries suffer from deficit economic constructs. Nigeria and Russia have a trade surplus. When it comes to income, the U.S. outpaces both countries, but we have a deficit that is approaching an area where recessions happen. Right before the Great Recession of 2007, the U.S. trade deficit was at a staggering -$803 billion. Then, under the Obama administration in 2009, there was a precipitous drop in the trade deficit to -$504 billion.
What we hear very often from the current POTUS is that this is the best economy that ever was. It is true that unemployment is at its lowest in recent history. At 4.0 percent, unemployment is lower now, than it was in 2007, when it stood at 4.7 percent. However, numbers always tell a tale that finds truth, which is a leading indicator about the health of America’s economy. And despite the apparent robustness of the current economy, history tends to repeat itself. Business moves in cycles; up and down, all day, every day. As consumers, we need to pay attention to these trends.
Most economists suggest that the recent trade tariffs are leading to more Americans having to foot the bill. We are very dependent upon China for trade opportunities, however, this current administration does not seem to understand that change needs to be scalable, and not sudden. We must know that China’s once red-hot economy is starting to cool, and has gradually come down since 2014. We are celebrating a 10-year bull market, and I’m sorry to say that all parties come to an end.
Finally, the writer of Proverbs says, “Go to the ant, you sluggard; consider her ways and be wise! Which, having no chief, overseer, or ruler, provides her food in the summer and gathers her supplies in the harvest.” Get while the getting’s good, because we never know, do we?”