Global Trade
U.S. imports are nearly $120 billion per month.
In May 2006, the year-over-year growth in U.S. imports was +12.7 percent. And, while the increase in the price of imported crude oil was a major contributor, the value of the increase in imported manufactured goods was twice as much (+ $49 billion in the five-month year-todate [YTD] period end-May versus the same period one year ago) as the increase in energy imports.
The trade balance for the first five months (YTD) of 2006 was in deficit to the tune of (−) $341 billion, an expansion of more than (−) $40 billion over the same YTD-2005 deficit.
These statistics are mind boggling, yet none of them illustrate the degree of imbalance and the magnitude of the U.S. import-driven deficit, defined by savings that have been consumed and then forward income that has been borrowed.
On a price-adjusted basis, as evidenced in Figure 27.1, real imports are propelling toward $200 billion per month, extending an explosive acceleration related to a secular rise in place since Nixon removed the U.S. dollar (USD) from the gold standard.
Remember, everything matters.
FIGURE 27.1 U.S. real imports of goods and services in billions of chained 2000 dollars: monthly since 1950
Source: Chart courtesy of Economagic, LLC. All rights reserved.
Figure 27.1 matters because it reflects why the USD is losing credibility as a reserve currency ...

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