Signs of Worldwide Slowdown

The US trade deficit had been ballooning for years, and finally, this year, it has begun to shrink. But the circumstances surrounding the shrinking trade deficit shouldn't give you the warm and fuzzies.

The deficit didn't decline because US companies exported more goods to equal the heavy amount of imports coming into the country. Instead, imports into the US fell because US businesses and consumers stopped buying. In fact, U.S. exports to big trading partners such as Canada, South Korea, Taiwan, and Australia slowed dramatically this year. At the same time, exports into the US from Ireland, Chile, France, Brazil, China, Argentina, and Germany fell sharply, and this undoubtedly will weaken their economies.

In fact, demand for goods around the world has dropped off as major countries suffer their own economic slowdowns. The latest news from Japan shows that country entering its fourth recession in less than 10 years. And many of the economies of Europe have caught the US' cold. The global consequences of the downturn in the US will only get worse as the slowdown continues in the months ahead.