Tuesday, July 13, 2004

If you were young and naive -- say, the news editor of the New York Times -- you might think a $46bn trade deficit in May was good news.
America's trade deficit narrowed to $46 billion in May, an improvement brought about as U.S. exports posted their best month on record.

The latest snapshot of trade activity, reported by the Commerce Department on Tuesday, came after the deficit had mushroomed to an all-time monthly high of $48.1 billion in April. The 4.5 percent reduction in the deficit during May represented the largest over-the-month decrease since October 2002. The decline was the first after five straight months of increases.
Well, "the largest over-the-month decrease since October 2002" does sound good, until you pull your nose out of the paper and look at the big picture.

The May 2004 trade deficit was the third largest in history, surpassed only by #1 April 2004 and #2 March 2004. The deficit came down 4.5% in May only because April's number completely blew a gasket. Thus far the 2004 deficit is outpacing the 2003 deficit by 11%; 2002 by 43%; and 2001 by 47%.

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