U.S. Trade Deficit Reaches All-Time High
ABC News: U.S. Trade Deficit Reaches All-Time High
Surge in Oil Imports Helps Drive U.S. Trade Deficit to All-Time High in October
By MARTIN CRUTSINGER
The Associated Press
WASHINGTON - A surge in oil imports and a flood of Chinese televisions, toys and computers helped to drive the U.S. trade deficit to an all-time high in October.
The Commerce Department reported Wednesday that the gap between what America sells overseas and what it imports rose by 4.4 percent to $68.9 billion, surpassing the record of $66 billion set in September.
The United States incurred record deficits in October with most of its major trading partners including China, the 25-nation European Union, Canada and Mexico. This development is certain to increase protectionist pressures in Congress, with many lawmakers already unhappy with the Bush administration's trade policies.
The worse-than-expected October performance was blamed in part on the Gulf Coast hurricanes. They curtailed domestic production of oil, chemicals and plastics, forcing companies to turn to overseas suppliers.
Nigel Gault, an economist at Global Insight, a forecasting firm in Lexington, Mass., said the sharp deterioration in the deficit would shave about 1.1 percentage points from economic growth in the final three months of the year. He predicted it would come in at about 3 percent.
He also forecast that this year's trade deficit would reach $730 billion, compared with the record of $617.6 billion last year. He predicted next year's deficit would be an even worse $760 billion before the deficit finally begins to improve in 2007.
On Wall Street, the Dow Jones industrial average rose 59.79 points Wednesday to close at 10,883.51.
Critics pointed to the rising deficits as evidence that President Bush's trade policies have failed to protect U.S. workers from an onslaught of imports made in China and other low-wage countries. These critics blame the trade deficits for the loss of 3 million manufacturing jobs in the U.S. over the past five years.
"Month after month, we see new record trade deficits that spell real trouble for the United States," said Sen. Byron Dorgan, D-N.D. "Behind these deficits are massive numbers of American jobs lost to foreign countries."
The administration is pursuing free trade deals with individual countries and negotiating a new global trade agreement under the auspices of the World Trade Organization. Critics say that approach is not working.
"We just don't see how current U.S. strategy is going to reverse these very dangerous trends," said Alan Tonelson, a research fellow at the U.S. Business and Industry Council. The group represents mainly small U.S. manufacturing companies.
Various lawmakers said the administration has failed to do enough to address China's trade practices. They mentioned taking tougher action to force China to let its currency to rise in value against the dollar as a way of making U.S. goods more competitive.
Treasury Secretary John Snow said the key to improving the trade deficit was to get Europe and other major trading partners to boost their economic growth. That way, they could buy more U.S. exports.
He told reporters that America's strong growth and low unemployment showed that the U.S. economy was now in a "sweet spot." He spoke in a joint session with Commerce Secretary Carlos Gutierrez and Labor Secretary Elaine Chao where the Cabinet members highlighted the president's economic record.
Analysts had expected the October deficit to improve because global oil prices retreated after setting record highs in early September.
The average price of a barrel of imported oil did decline slightly to $56.29 in October, but the volume of shipments shot up as buyers turned to overseas suppliers following Gulf Coast production shutdowns. The total bill for imports in October hit a record of $25.8 billion, up 7.8 percent from September.
A surge of Chinese shipments of televisions, toys and computers delivered to U.S. stores for holiday shoppers pushed the U.S. deficit with China to a new monthly record of $20.5 billion. So far this year, the deficit with China is running at an annual rate of $200 billion, far above last year's record deficit of $162 billion.
Administration efforts to reimpose quotas to halt a flood of Chinese clothing and textiles coming into the United States appeared to be having an impact as these imports were down 10.9 percent in October.
For October, imports of all goods and services rose by 2.7 percent to an all-time high of $176.4 billion, led by the surge in oil shipments. U.S. exports also rose but by a smaller 1.7 percent to $107.5 billion, reflecting in part a rebound in sales of commercial aircraft following the end of a strike at Boeing Co.
The United States set deficit records with a number of trading partners, including a $12.1 billion imbalance with the European Union, an $8.1 billion imbalance with Canada, the country's largest trading partner, and a $4.8 billion deficit with Mexico.
On the Net:
Trade report: http://www.census.gov/ft900
Surge in Oil Imports Helps Drive U.S. Trade Deficit to All-Time High in October
By MARTIN CRUTSINGER
The Associated Press
WASHINGTON - A surge in oil imports and a flood of Chinese televisions, toys and computers helped to drive the U.S. trade deficit to an all-time high in October.
The Commerce Department reported Wednesday that the gap between what America sells overseas and what it imports rose by 4.4 percent to $68.9 billion, surpassing the record of $66 billion set in September.
The United States incurred record deficits in October with most of its major trading partners including China, the 25-nation European Union, Canada and Mexico. This development is certain to increase protectionist pressures in Congress, with many lawmakers already unhappy with the Bush administration's trade policies.
The worse-than-expected October performance was blamed in part on the Gulf Coast hurricanes. They curtailed domestic production of oil, chemicals and plastics, forcing companies to turn to overseas suppliers.
Nigel Gault, an economist at Global Insight, a forecasting firm in Lexington, Mass., said the sharp deterioration in the deficit would shave about 1.1 percentage points from economic growth in the final three months of the year. He predicted it would come in at about 3 percent.
He also forecast that this year's trade deficit would reach $730 billion, compared with the record of $617.6 billion last year. He predicted next year's deficit would be an even worse $760 billion before the deficit finally begins to improve in 2007.
On Wall Street, the Dow Jones industrial average rose 59.79 points Wednesday to close at 10,883.51.
Critics pointed to the rising deficits as evidence that President Bush's trade policies have failed to protect U.S. workers from an onslaught of imports made in China and other low-wage countries. These critics blame the trade deficits for the loss of 3 million manufacturing jobs in the U.S. over the past five years.
"Month after month, we see new record trade deficits that spell real trouble for the United States," said Sen. Byron Dorgan, D-N.D. "Behind these deficits are massive numbers of American jobs lost to foreign countries."
The administration is pursuing free trade deals with individual countries and negotiating a new global trade agreement under the auspices of the World Trade Organization. Critics say that approach is not working.
"We just don't see how current U.S. strategy is going to reverse these very dangerous trends," said Alan Tonelson, a research fellow at the U.S. Business and Industry Council. The group represents mainly small U.S. manufacturing companies.
Various lawmakers said the administration has failed to do enough to address China's trade practices. They mentioned taking tougher action to force China to let its currency to rise in value against the dollar as a way of making U.S. goods more competitive.
Treasury Secretary John Snow said the key to improving the trade deficit was to get Europe and other major trading partners to boost their economic growth. That way, they could buy more U.S. exports.
He told reporters that America's strong growth and low unemployment showed that the U.S. economy was now in a "sweet spot." He spoke in a joint session with Commerce Secretary Carlos Gutierrez and Labor Secretary Elaine Chao where the Cabinet members highlighted the president's economic record.
Analysts had expected the October deficit to improve because global oil prices retreated after setting record highs in early September.
The average price of a barrel of imported oil did decline slightly to $56.29 in October, but the volume of shipments shot up as buyers turned to overseas suppliers following Gulf Coast production shutdowns. The total bill for imports in October hit a record of $25.8 billion, up 7.8 percent from September.
A surge of Chinese shipments of televisions, toys and computers delivered to U.S. stores for holiday shoppers pushed the U.S. deficit with China to a new monthly record of $20.5 billion. So far this year, the deficit with China is running at an annual rate of $200 billion, far above last year's record deficit of $162 billion.
Administration efforts to reimpose quotas to halt a flood of Chinese clothing and textiles coming into the United States appeared to be having an impact as these imports were down 10.9 percent in October.
For October, imports of all goods and services rose by 2.7 percent to an all-time high of $176.4 billion, led by the surge in oil shipments. U.S. exports also rose but by a smaller 1.7 percent to $107.5 billion, reflecting in part a rebound in sales of commercial aircraft following the end of a strike at Boeing Co.
The United States set deficit records with a number of trading partners, including a $12.1 billion imbalance with the European Union, an $8.1 billion imbalance with Canada, the country's largest trading partner, and a $4.8 billion deficit with Mexico.
On the Net:
Trade report: http://www.census.gov/ft900
posted by Marcel at 4:21 AM
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