A weak dollar may just save Obama in 2012

[I AM NOT THAT GUY 5,715]

Weak dollar no quick fix for narrowing trade gap

WASHINGTON – A weaker dollar may boost the nation's economy by increasing exports and narrowing the trade gap — but that won't happen anytime soon.

Instead, the nation's trade deficit rose in September by the largest percentage in a decade as U.S. exports grew for the fifth straight month, but imports rose faster, a government report showed Friday. That trend is likely to continue until the middle of next year, economists said.

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Higher exports, spurred by a lower dollar, probably won't reduce the trade gap and boost the U.S. economy until 2011, economists said.

"You tend to see imports surge when production begins to grow," said Julia Coronado, senior U.S. economist at BNP Paribas. That's overriding the benefit of the weaker dollar on exports, she said.

Imports in September rose 5.8 percent from August, led by a 20 percent jump in oil shipments. That's the biggest rise in imports in 16 years. Exports, meanwhile, increased about 3 percent, reflecting stronger sales of American autos, aircraft and industrial machinery.

Overall, the monthly trade deficit jumped 18.2 percent to $36.5 billion, the Commerce Department said, the largest monthly percentage increase since February 1999.

The weaker U.S. dollar will likely have a greater impact on U.S. exports by late next year, economists said. When the dollar declines compared with other currencies, it makes U.S. exports cheaper and imports more expensive, narrowing the trade deficit.

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The impact of a cheaper dollar can also take as long as a year to kick in, said Paul Dales, U.S. economist at Capital Economics. That's because foreign exporters to the U.S. don't immediately adjust their prices to take into account changes in exchange rates.

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The U.S. deficit with China, which had been falling, jumped 9.2 percent to $22.1 billion in September, the highest imbalance in 10 months. For the year, the U.S. trade deficit with China is down about 16 percent, though the gap is still the largest the U.S. has with any country.

China on Thursday appeared to signal that it would allow its currency, the yuan, to rise against the dollar. The Chinese central bank said Thursday it would alter how it manages the yuan, which is currently pegged to the dollar. That change raised hopes among economists that China was preparing to allow its currency to rise in value, a change that would boost the competitiveness of American products in China.

American manufacturers contend that China is manipulating the value of its currency, keeping it undervalued by as much as 40 percent in relation to the dollar. That gives Chinese manufacturers a competitive advantage and makes U.S. goods more expensive in China.

http://news.yahoo.com/s/ap/20091113/ap_on_...c_fi/us_economy

[Hilarious Clinton 452]

[DEDixon 39]

obama will sail through reelection, because the economy will be way better by then and americans will be out at the mall and car dealerships... as long as americans can spend, they could seriously care less about who is president.

slim chance a repub will win in 2012.

[I AM NOT THAT GUY 5,715]

obama will sail through reelection, because the economy will be way better by then and americans will be out at the mall and car dealerships... as long as americans can spend, they could seriously care less about who is president.

slim chance a repub will win in 2012.

A lot depends on inflation, and whether people start working again. As long as we remain above 8% unemployment, there is sufficient pressure on wages to keep labor costs down, and prices as well. If the economy recovers too fast, then inflation, along with a weak dollar, will drive import prices out of sight. Add that to minimal production capacity in the US, we could see shortages for many household items we are used to buying from China and Mexico.

A lot depends on the timing, as well, and whether Obama benefits, or is denied in 2012, still a long way off. At this point, it is hard to tell whether to use the Clinton model, or the Carter model. We will see what happens in next year's Congressional races. That should make things interesting. The early primaries are just a few months away.

Edited November 14, 2009 by Lone Ranger

[Mr. Big Dog 10,747]

slim chance a repub will win in 2012.

[AlHayatZween 2]

the economy will be way better by then

i hope you are right... not for Obama or Washington or politics... just for the rest of us trying to get by!