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Trading Deficit in the U.S

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Trading deficit in the U.S

Article: Trading Deficit Grows Wider As Exports Hit Headwinds
The Wall Street Journal, November 5, 2014

Part I Introduction: The article in the Wall Street Journal discusses the American trading deficit due to decreasing export. It first states the fact that the American trade gap has widened in September this year as export fell to a five-month low. The writer view this widen gap as the proof of how a stronger dollar and slower growth overseas could dent U.S export. Figure raised in the paragraphs include the rising of trade deficit of 7.6% and the decreasing of U.S export of 1.5% from August while the import stays unchanged. Quoted in the article that according to Michael Montgomery, an economist at HIS Global Insight: the drop in export is mostly due to the oil and aircraft industries. The article also brought up the reports about the U.S GDP growth expanded at a 3.5%annual rate in the third quarter. And from the reports, the writer argued that many people expect the growth will trim as U.S dollars continuing strengthen against foreign currencies and. Moreover, some experts predict the trade will drag on growth through the middle of next year. At the end of the article, the writer presented the figures about the U.S imports / exports with China and the figures about petroleum imports/exports to restate the problem of trading deficit. The topics covered in this article relates to macroeconomic knowledge learned in class as it covers trading deficit, currency appreciation and the export and import that are related to GDP of the country.

Part II Theory Review and Analysis Learned in class, trading deficit is a situation where a country’s imports are larger than the exports, which is the opposite of trading surplus. And in this circumstance, the country experiencing trading deficit will want to depreciate...

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