Why is the U.S. importing so much?
TEXT OF STORY
Kai Ryssdal: We begin with international trade. Our trade, specifically, and how much more stuff we’re buying from overseas than we’re sending abroad. The actual statistic, in case you’re curious, is $49.9 billion’s worth of stuff — the biggest our trade gap’s been in almost two years. But, here’s the thing: If the economy’s weak — and the Fed basically said yesterday that it still is — why are we importing so much?
We sent Marketplace’s Scott Tong in Washington to check it out.
Scott Tong: Maybe retailers are stocking up for a fall harvest. The $5 billion in additional stuff coming from overseas includes TVs, shoes, clothing, largely from China.
Catherine Mann teaches economics at Brandeis University.
Catherine Mann: Businesses that are serving the consumer at the mall do think that the consumer is gonna come back, and that retail sales will be stronger in the fall. They’d be buying now for the fall sales.
What was that? Consumers could be back — despite the job market, despite the credit market — to help push this economy? That would help some of the chief pushers — manufacturers. They saw a tough June. Exports fell more than $2 billion.
Economist Michael Hanson at Bank of America-Merrill Lynch says overseas customers in places like Europe and China bought less of almost everything America sells.
Michael Hanson: Semiconductors, computers, telecoms, industrial supplies. It’s kind of broad base. And it does suggest that it’s, in part, some weakness abroad.
Do the math — and weak exports and strong imports equals hefty trade deficit that will drag on America’s key economic yardstick: GDP. Still, it’s just one month’s number, and many expect the crucial export sector to bounce back. Why? The dollar could weaken, making U.S. exports cheaper overseas.
It’s tricky, but Michael Gapen at Barclays Capital says the Fed has signaled that it may pump more dollars into the system, which would send the value of the currency lower.
Michael Gapen: If you believe yesterday’s action has started the Fed in motion, you could make a case for a weaker dollar going forward that would be supportive of the export sector.
That is, if our friends overseas feel confident enough to buy.
In Washington I’m Scott Tong for Marketplace.
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