US trade deficit widens to $42.3 billion in May

The U.S. trade deficit widened in May to the highest level in 18 months as a rebounding economy pushed up demand for imports of foreign-made cars, computers and clothing.

The trend line break of the 2008 swing low is inconsistent with the start or resumption of another hemorrhage phase as suggested by many. Hemorrhage phases are typified by a shift from risk-taking to risk aversion. Net exports relative to GDP will fall during injection or consumption driven phases for countries with structural deficits. Countries that consume more than they produce must issue paper or claims to future consumption to maintain their current standard of living. This is the prevailing business model for the US.

Cheap foreign goods paid for by future promises that if increased too far will limit its ability to make new promises without the use of the printing press. The invisible hand of the market, despite obvious control, continues to push gold higher because system based on infinite debt creation and finite production has its limits.

Net Exports (Census Basis) As A % GDP:


Source: finance.yahoo.com