Trade Balancing Act

Lots of people are worried about trade. Last year the trade deficit was over 5% of GDP. That’s a lot of potential jobs. Many commentators feel that the dollar has to fall dramatically in order for the US economy to become competitive enough to balance things out.

I think that this is too simplistic. Look at the details. Of that 5%, 1½% is oil imports. A lower dollar won’t help with those. Another 1½% is with China. The dollar’s already falling there. A lower exchange rate against the Euro or the Yen should reduce their exports to us, but at some point their economies will weaken, and they’ll become unable to buy our stuff, no matter how cheap it gets.

A man’s life doesn’t consist in the abundance of his possessions, and a nation’s wealth isn’t measured by how much it sells. Our exports are already growing dramatically. A lower dollar? That only adds fuel to the fire.


Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-03T18:06:20+00:00 April 11th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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