October Exports Down 1% Imports Up 1.5%: Expect Trump to Howl

The balance of trade deficit increased sharply in October with exports down and imports up.

For October, the Census Bureau reported the trade deficit widened by 2.5 percentage points, with exports down 1.0% and imports up 1.5%.

From a year ago, exports are up 5.5% and imports are up 7.1%.

In US dollar terms, the October deficit is $68.3 billion, up from $64.1 billion in September, an increase of 6.5%.

These numbers will subtract a couple ticks from fourth-quarter GDP estimates. They will also have Trump howling about trade deficits.

Mike "Mish" Shedlock

We are taking in more "stuff" than we are sending out to the rest of the world and "paying" for it with funny money that is backed by nothing and created out of thin air.

And we are the ones complaining about this?

Trumps trade policies already backfiring.

Hurricane distorted. We took a decent chunk of exports off line because of the storms.

I read that China was supposedly slashing the tariff on 187 imported items.

Over the years I have talked about this problem ad nauseum here on Mish’s blog and other places from way back even before the supposed to be secret Plaza Accords in 1985 when Reagan was president. Since Reagan was more of a true free trade tax cutting capitalist, everybody in the world started shoving their money into the dollar, and into dollar based assets of stocks, bonds whatever. The bull market for example, gave foreign investors a twofold return as the dollar and stocks kept moving up together. Well the dollar got so strong it began to hurt American multinational corporations ability to compete. So the Plaza Accords mission was to take down the dollar to a more reasonable level to help our multinational companies and reduce the trade deficit. Despite a crash of over 20% in the stock market on black Monday Oct 19, 1987, the PPT was able to bring confidence back into equity markets all the world over. Finally my point is that when the dollar got down to a more reasonable, fairer level, American multinational corporations, instead of growing their businesses in a responsible way , using their advantage to gain market share, selflessly just raised their prices, to get the earnings up in a hurry to get the stock up so their stock options would appreciate making them rich n a hurry. IMO stock options help to make executives selfish and irresponsible. Now we see it all over again as corporate executives borrow hundreds of billions of dollars at low interest rates for stock buybacks getting the earnings up, their stock up to raise the value of their options once again the fast and easy way-so hey go for it boys! Our trade deficit with China alone is almost a billion a day so if the Trump administration wants to get the dollar down to help the trade deficit and boost our exports, and provide jobs, he’s going to do much more than just reduce the Corp. tax. Something has to b done about stock options , and irresponsible selfish buybacks.

@truthseeker, big banks are neck deep in lending against stock prices. Big PE firms and hedge funds borrow billions speculating in stocks. The only thing that matters to the owners of American companies are the stock price, because they have debt that must be re-paid. The solution is only in reining in the banks. But that requires having a government that is not under full regulatory capture.

Bam_man, yes, we are exporting paper in exchange for goods, a nice business if you can keep it going in perpetuity, but, unfortunately, eventually deficits do matter. In time those holding all those dollars want to own something more substantial, so they buy American businesses and real estate. If we keep it up long enough, we can do what the Indians did. We can trade out valuable land for bead and blankers, er cell phones and small appliances, that in a generation will be in the landfill.

JonSellers ~several years ago just after an hour or so of research to confirm the ideas I already had about banks and central bankers in our country, I posted my comments here on Mish’s blog..I need to mention that a good bit of what I learned over the years came by way of Mish himself.Just briefly i mostly agree with your comments. With the powerful way banks are structured these days, one learns the golden rule in a hurry “he who owns the gold makes the rules”.I don’t have the comments I sent back then but it was mostly I think how the banks used their power to influence those n the political realm to repeal Glass Steagall act 1933 to place banks and brokerage houses back in bed together, and getting new rules that permitted increased leverage way beyond what the futures market already provided, while dreaming up new financial products, CDS, CLO, just to name two referred to by Warren Buffett as financial weapons of mass destruction. When things began to collapse in 2008, Hank Paulson went begging for 800 billion to provide liquidity to get the banks and markets open again, but when Ben Bernanke started with QE~1, I knew we were starting down a road from which we ~ America would not recover. Mish at the time said, among other things, how do you solve a debt problem with more debt? How much longer they can they hold things together no one knows but things r going to keep getting worse as more jobs r lost and the culture continues to deteriorate. Nine years ago we should have let markets collapse.,debts default the world over. Now it will be so much worse and probably lead to war. Had Paul Volcker been the Fed chairman none of this would have ever happened imo. Sure enough in the new rules to govern banks, the Volcker rule to reduce leverage and trillion dollar derivative bets by banks, was finally thrown out last year for the most part.

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