U.S. Economy: Trade Deficit Swelled to $58.8 Billion in June
  911:  The Road to Tyranny    
         

Alex Jones Presents Police State 3:  Total Enslavement

 

America Destroyed by Design

Mass Murderers Agree:  Gun Control Works!  T-Shirt

   
     
 

U.S. Economy: Trade Deficit Swelled to $58.8 Billion in June

Bloomberg | August 12, 2005

Americans imported record amounts of crude oil and Chinese-made goods in June as the U.S. economy began to accelerate, propelling the nation's trade deficit to a wider- than-expected $58.8 billion.

The trade gap swelled 6.1 percent to the third-widest ever from $55.4 billion in May, the Commerce Department said today. Imports rose faster than exports, while both were at all-time highs. Record fuel costs pulled down Americans' confidence in August, a University of Michigan report showed today.

Overseas companies shipped more aircraft, apparel and appliances to the U.S. in June, at the same time that crude oil prices first breached $60 a barrel. With oil prices at a record today and the economy accelerating, economists said there's little likelihood the trade gap will improve later this year.

``We're still in a situation where the deficit is going to widen again,'' said Michael Moran, chief economist at Daiwa Securities America Inc., who forecast a $58.3 billion June trade gap. ``We need to see stronger growth in foreign countries and a softer dollar, and we haven't seen enough on either front to see sustained improvement in the deficit.''

The wider gap means second-quarter growth likely didn't accelerate from early readings as expected after a pickup in construction spending and a smaller reduction in inventories, said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut. He said second-quarter growth will probably stay the 3.4 percent annual pace the government estimated last month.

Confidence Wanes

The University of Michigan said its August index of consumer sentiment fell to 92.7 from 96.5. The university's measure of current conditions, which reflects Americans' perceptions of their financial situations and whether it's a good time to buy big- ticket items, fell. People were also less optimistic about the next one to five years.

Economists predicted the trade gap would widen to $57.2 billion for the month after a previously reported $55.3 billion in May, according to the median estimate of 64 forecasts in a Bloomberg News economist survey.

The 4 1/4 percent Treasury note maturing in August 2015 rose 1/4, pushing down the yield 3 basis points to 4.28 percent at 10:22 a.m. in New York. Higher energy prices helped push down the Standard & Poor's 500 Index 6 points, or 0.5 percent.

``The economy fundamentally is quite strong, but there is no question that surging energy prices have the capacity to push spending off track temporarily,'' said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.

Imports Reach Records

June imports rose 2.1 percent to $165.7 billion, while exports were up 0.1 percent to $106.8 billion. The June gap exceeds the monthly average deficit of $51.5 billion in 2004, when the annual shortfall of $618 billion was the largest ever. The deficit is already $342.9 billion so far this year, compared with $290.9 billion in the same six months of 2004.

``We're very concerned about the trade deficit,'' said Allan Hubbard, director of the White House's National Economic Council, in an interview. ``It is the result of a couple of things. On is that America is growing so much faster than other developed countries in the world. It is also a product of the fact that the Chinese have held down their currency.''

The value of crude oil imported into the U.S. rose in June to a record $14.6 billion from $13.7 billion the previous month. The price of a barrel of crude oil was $44.40. The U.S. imported 328.3 million barrels for the month, compared with 318.6 million barrels in May.

Crude oil for September delivery on the New York Mercantile rose to a record $66.15 today.

Energy Prices

``These prices are clearly a negative,'' said Treasury Secretary John Snow in an interview yesterday. ``They create headwinds and slow the economy down. I don't know precisely how much, but I hazard to guess that it's 0.3 percent to 0.6 percent'' of gross domestic product.

In July, prices of imported goods rose by the most in four months because of energy. The 1.1 percent rise followed a 1 percent gain in June. Excluding petroleum, import prices fell 0.1 percent after a 0.2 percent decrease, figures that support the Federal Reserve's statement that inflation is ``well contained.''

The politically sensitive deficit with China widened to $17.6 billion, surpassing the previous record of $16.8 billion in October and possibly fueling criticism on Capitol Hill of China's trade policies. China accounted for more than a quarter of the total U.S. trade deficit in June.

China

Senator Charles Schumer, a Democrat from New York, and other lawmakers revived legislation that would mandate tariffs on Chinese goods to compensate for what they see as an advantage Chinese exporters get because their currency is not fairly valued.

China announced on July 21 that it was allowing the yuan to strengthen for the first time in a decade by 2.1 percent, a revaluation that Schumer and others said doesn't go far enough. The U.S., along with the European Union, slapped quotas on some Chinese clothing exports. Chinese textile exports rose 21 percent in the first six months of this year from the same period a year earlier, the Chinese government said last month.

``Chinese politicians want their American counterparts to think there is more to come,'' said Douglas Lee, president of Economics From Washington in Potomac, Maryland. ``It will not work. Even our most mathematically challenged politicians have figured out that 2 percent is too small a number to be meaningful.''

The gap probably stayed wide in July as well. China's surplus grew to $10.3 billion last month from $9.68 billion, according to the country's customs bureau figures reported by the Xinhua News Agency yesterday.

Europe's Economy

A stronger dollar that made U.S. goods more expensive in foreign markets limited exports in June, economists said. The dollar gained 3.6 percent against a basket of other currencies in the first six months of 2005, its biggest first-half increase since 2001.

``People are already looking to the second half, and they're beginning to think that we haven't seen the worst for the trade deficit,'' said Michael Gregory, a senior economist at BMO Nesbitt Burns in Toronto. ``The strengthening U.S. dollar hurts when the rest of the world isn't performing as well as the U.S. economy, and growth in income will keep consumers spending on foreign goods.''

A narrowing of the trade deficit compared with the first quarter added 1.6 percentage points to second-quarter GDP, the most since the fourth quarter of 1996.

The International Monetary Fund cut its forecast for economic expansion in the 12-nation euro region, blaming record oil costs and sluggish consumer demand. The lender now expects growth of 1.3 percent this year, less than the 1.6 percent it predicted in April and last year's 2 percent rate, said its annual study released in Washington Aug. 3. The IMF said this week that Japan's economy may grow 1.8 percent this year.

Consumer Goods

Revenue growth at Hopkinton, Massachusetts-based EMC Corp., the world's biggest maker of data storage computers and software, will slow to 14 percent from a forecast of 17 percent this year, in part because a stronger U.S. dollar will trim the value of sales, chief executive officer Joseph Tucci said in an Aug. 4 interview.

U.S. retail sales rose 1.7 percent in June, led by spending on automobiles and clothing. Imports are helping meet that demand. The U.S. imported 0.4 percent more consumer goods. Imports of apparel increased 1.3 percent and shipments of appliances from overseas rose 3.4 percent.

Hyundai Motor Co., South Korea's largest automaker, sold 4.1 percent more vehicles in the U.S. than a year ago during June. Toyota Motor Corp., which in June unveiled plans for a seventh North American assembly plant, sold 14 percent more Toyota, Lexus and Scion models during the month than a year earlier.

Imports of capital equipment increased 4 percent to $32.6 billion, reflecting more overseas shipments of civilian aircraft, oilfield drilling equipment, computers, telecommunications gear and industrial machinery.

U.S. exports of capital goods rose 1.9 percent. Exports of industrial supplies rose 1 percent, while shipments overseas of consumer goods dropped 2.2 percent.

The deficit with Canada, the largest U.S. trading partner, widened to $5.4 billion from $4.8 billion. The shortfall with Japan, the world's second largest economy, grew to $6.9 billion from $6.6 billion.

The deficit with Mexico widened to a record $4.8 billion from $4.5 billion. The deficit with Europe widened to $12.8 billion from $12.1 billion.


 


911:  The Road to Tyranny

E-MAIL THIS LINK
Enter recipient's e-mail:

<< HOME

 
   
 

911:  The Road to Tyranny