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BALANCE
OF TRADE
Each
month we receive a report on the radio or television about the
balance of trade, and whether our trade deficit has widened or
narrowed. When our government says that our balance of trade deficit
has widened, they mean we have imported more product or service
during that month than we exported.
If our government says our balance of trade deficit has
narrowed, they mean we have exported more product or service than we
imported. With rare
exception our balance of trade deficit widens each month, because we
continually import substantially more than we export.
To complicate things
more is the fact that we currently have a low value dollar. Further, we import more and more products and services.
Therefore it takes many more low valued dollars to purchase
all the imported goods we consume.
Now many of us are
complaining about the cost of living.
While the numerical statistics indicate that the cost of
living is only increasing at a relatively low rate, we can point to
certain items, such as fuel, food and health care that keep us
feeling poor. We
continually have to spend more for the things we need than we take
in as income. So, what
is a person to do?
But wait a minute.
There is a bright spot here.
Because the value of the U.S. dollar stays quite low in
comparison with many foreign currencies, many foreign companies will
be buying inexpensive U.S. goods and services. Those companies who stayed in the U.S. to manufacture or
market their products or services will find renewed foreign interest
in their exports. This
should continue for some time until the cost of living becomes much
too high, or interest rates are raised to cut spending, or the U.S.
dollar becomes substantially higher compared to foreign currencies,
and we again begin to buy more imports.
Prediction: We
will see at least several months of balance of trade deficit
narrowing. Both imports
and exports will increase, but exports will increase at a greater
pace.
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LONGSHORE
LABOR
We need to keep eyes
and ears open regarding developments in the U.S. West Coast
longshore labor contract negotiations.
Some predictions indicate that we could see some problems
ahead. On the negative
side is the fact that longshore workers feel the same pinch that the
rest of us feel, when we purchase our day-to-day necessities.
The auto workers are gearing up for contract negotiations,
and longshore workers will want to keep pace.
Labor argues that they have taken reductions and made
concessions for some time, and now the economy and particularly the
stock market is making great strides.
Labor will want a part of that action.
On the positive side
for an early and amicable settlement is the fact that importers and
exporters have shifted a lot of freight away from the U.S. West
Coast. A couple years
ago a peak season debacle on the west coast tied up import and
export shipments for weeks. This
was not entirely labor related, but it got the importers and
exporters to take note. And
take note they did. We
have not seen a serious peak season problem since that time.
Many routed their freight via the U.S. Gulf Coast and/or the
U.S. East Coast via the Panama Canal.
This and increased trade between the East Coast of
South America and the Far East put a lot of pressure on the
Panama Canal—so much so that by 2012 the Panama Canal capacity
will be doubled. This will not be a serious factor in the near term, but it
will be a consideration in negotiations.
In the near term we
are seeing some steamship lines avoiding the Panama Canal altogether
and routing freight between the U.S. Gulf and East Coasts and the
Far East via the Suez Canal. In
addition improvements are being made to Mexican West Coast ports and
ports in British Columbia. Prince
Rupert in B.C. is already handling a sizeable number of shipments.
Mexican and Canadian west coast ports are not covered by the
U.S. west coast longshore labor contract.
Obviously we will need to pay attention as negotiations
develop.
THOUGHT TO PONDER.
We are hearing about record or near record low levels in the
water in the U.S. Great Lakes.
We are also hearing about glaciers melting and increasing
ocean water levels. Are
both of these connected to global warming?
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