US Trade Deficit Narrows

From the department of basic-economics-101:

The US trade deficit narrowed more substantially than expected in August as export levels rose to a monthly high while imports fell.

It fell 2.4% to $57.6bn (£28.3bn), the lowest monthly shortfall since January.

The politically-sensitive deficit with China narrowed by 5.3% to $22.5bn as the US sold more aircraft and soybeans while China sold fewer computers.

Despite a string of high-profile safety recalls of toys, Chinese toy exports to the US actually increased.

This was largely due to retailers ordering more stock ahead of Thanksgiving and Christmas.

The value of US exports rose to a record $138.3bn in August thanks, in part, to the fall in the value of the US dollar against other major currencies which made exports more competitive.

In contrast, the value of imports fell 0.4% to $195.9bn as US firms reduced shipments of foreign-made cars and furniture.

With the US economy slowing and the US Dollar dropping in value, there would be less demand for imported goods and more demand for exported goods (since US products would become cheaper). As the US economy goes into recession, the imbalances of massive net overseas debt will be reversed.