Trade deficit up 10.6 percent in December
Indicating that we're buying more cheap stuff and selling less expensive expensive stuff (which adds up to further evidence of the coming deflationary epoch), the U.S. trade deficit took an unanticipated leap in December, climing 10.6 percent to $44.2 billion. Analysts had expected the deficit to be closer to $39 billion. Deflation's a-comin', folks.
``In a difficult economy, everyone is trying to cut cost and raise productivity. The best way to do that is to produce in China,'' [Wells Fargo Bank economist Sung Won Sohn] Sohn said.
In other words, cheap labor will set global prices. And China's cheap labor includes lots of scientists and engineers, which will drive down U.S. cost structures.
Not all the news is bad. We still run a services export surplus of services, but importation of services grew at three times the pace services exports did. Interestingly, despite all the crying about piracy, royalties and licensing fees accounted for a $4 billion gain in services imports during 2002.
Posted by Mitch Ratcliffe at February 20, 2003 12:23 PM | TrackBack