Jun 05, 2013, 06.13 PM | Source: Moneycontrol.com
Mecklai graph of the day: The U.S deficit has widened due to the increasing demand for consumer goods imports but at a narrower pace this year for April 2013.
Jamal Mecklai (more)
CEO, Mecklai Financial | Capital Expertise: Currencies
The U.S deficit has widened due to the increasing demand for consumer goods imports but at a narrower pace this year for April 2013. The gap of trade deficit of US widened by 38 percent from January 2010 to January 2012 and narrowed later by 27.5 percent from January 2012 till date. In recent times, trade gap has increased by 8.5 percent from USD 37.1 bn in March to USD 40.3 bn in April. The reduction of U.S dependence on oil and petroleum products from the Middle East and other oil exporting countries has majorly reduced the imports.
A wider trade gap can restrain the U.S growth as the consumer and businesses are spending more on foreign goods than the U.S companies are raking in on their overseas sales. The slumping Chinese imports and European recessionary crises have taken a negative toll on the U.S exports. These fewer exports have also affected the manufacturing and factory activities in the country.
The increase in imports suggested that consumer spending increased showing that people are more confident to spend rather than save, a positive to the growth prospects of the nation. With growth back along with improvement in Labor market and an increasing inflation would facilitate the Fed to scale back on QE3.
The below graph shows Trade Deficit numbers of US since January 2010
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