What's going on?

Whoa! In January, imports into the US hit their highest level in five years relative to exports!

What does this mean?

The difference between the value of imports and exports is called the �trade balance.� It�s nice to have lots of goods and services coming in, but of course these have to be paid for: so a deficit number shows that more money is going out than coming in. That money is being paid to companies abroad, and as such is viewed as a negative for the US economy � although there are benefits to trade, of course.

Why should I care?

For markets: Change in policy could have winners and losers.

Because the deficit has two sides to it, reducing it can be attempted in broadly two ways: increasing exports or decreasing imports. Lowering taxes for US companies could lower the costs of producing goods in the US and thus make them more competitive on the international market. Putting up taxes on imports is another approach (and one that is currently being discussed in Washington). The former would, of course, benefit exporters like Boeing, and the latter would hurt importers like Wal-Mart.

For you personally: Trade is a trade-off.

Generally speaking, more trade helps reduce the cost of goods for consumers because they can be sourced at a lower price from abroad. That�s nice if you want to buy a car or some household appliances. But it�s usually not so good if, say, you work in manufacturing or if you live in a town that depends on manufacturing for its economic health.