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Bad news: trade deficit narrows

Wait a minute, isn’t a widening trade deficit supposed to be bad too? Here’s the thing: the trade gap is narrowing because the price of oil is collapsing along with U.S. demand for other imported necessities from around the world.

Analysts said the global slump will hurt big exporters such as Caterpillar Inc. and other heavy equipment manufacturers that had been enjoying rising export sales because of a construction boom, particularly in Asia.

“We are seeing manufacturing production plunging this quarter and a big driver of that decline is the drop in foreign demand,” Gault said.

Normally a low dollar helps Cat and the other big machinery companies, but it strikes me that it helps primarily if its overseas customers are already in a buying mood.

Cat’s standing as the world’s numero uno earthmoving concern will see it through this downturn, but the short-run outlook doesn’t look good.

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Tom Mangan posted at 12:04 am December 18th, 2008 |

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