Has the US economy turned the corner?
There was a sudden reduction in the U.S. trade deficit published today with the announcement of a $32.9 billion deficit for October against a "downwardly revised" figure of $35.7 billion for September. The main kicker for the improvement in the trading environment seems to have been a rise in exports, helped by the weak dollar, although the very fact US businesses seem to be experiencing an improving trading environment is obviously a major benefit.
This is yet another sign that the US economy is turning the corner although any improvement in the strength of the dollar may well have a detrimental impact on short-term exports. The figure of $32.9 billion is even more impressive when you consider that experts had expected a figure of $36.8 billion (a worse position than the revised September figure). So what next for the US economy?
There is no doubt that the US authorities and the US business arena will take heart from these improved figures although as we keep recommending on a regular basis, there is a need to look at the trend rather than short-term patterns. The proof is literally in the pudding and slowly but surely we should start to see an improvement in the U.S. trade deficit which will ultimately feed through into the economy and eventually see a return of confidence to the consumer market and the business arena.
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