It's a bit shocking that until the last year or so, Australia managed to run a trade deficit during a resource boom. The tables below from the Department of Foreign Affairs and Trade show that from May 2004 to June 2008 - a period during which the All Ordinaries went up 98%, from 3,401 to a high of 6,760 - Australia recorded a trade deficit in 51 consecutive months. We even wrote about a longer streak of 75 consecutive months of trade deficits at the time.

 Source: Department of Foreign Affairs and Trade  Source: Department of Foreign Affairs and Trade

The streak was broken in 2008 - mostly thanks to falling imports during the panicked early days of the GFC (which has now arrived in Australia with monster truck force). Then, by June 2010, rising iron ore and coal prices started to deliver a string of twenty-out-of-twenty-one months of actual trade surpluses. This was the very peak of the boom - where the price blowout in iron ore and coal delivered a rare period of trade surpluses.

The question now is whether Australia is any better off macro economically than it was before the boom. Are you better off than you were eight years ago? That's an interesting question. Send us your answer to letters@dailyreckoning.com.au. We'll publish the results early next week.

Regards,

Dan Denning
for The Daily Reckoning Australia