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US trade deficit Thread 2006
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The U.S. trade deficit widened less than expected in April, but oil import prices increase in May 2006. THe increase in prices will likely see an increase in interest rates once again in the US.
The U.S. trade gap widened to $63.4 billion in April, lower than the $65 billion shortfall Wall Street analysts had expected. However, another government report put import prices up 1.6 percent in May, more than twice the increase expected.
The trade gap grew 2.5 percent from a slightly revised estimate of $61.9 billion in March. In the first four months of this year, the trade gap totaled $254.2 billion, on pace to surpass the record of $716.7 billion set for all of last year.
The price data added to inflation concerns that could prompt the Fed to again raise interest rates at its meeting on June 28-29. Fed Chairman Ben Bernanke is scheduled to speak about energy policy to the Economic Club of Chicago on Thursday.
U.S. Treasury debt prices turned lower because May import prices suggested inflation may be rising above the Fed's comfort level. U.S. stock market indexes were modestly higher on an improved outlook for technology companies.
April imports grew 0.7 percent from the previous month to $179.1 billion, the second highest on record. Oil and other petroleum products accounted for nearly $23.4 billion of the total, although import volumes fell as prices rose.
Imports of capital goods, such as computers and computer accessories, telecommunication equipment and industrial machines, hit a record while other categories such as automobiles and consumer goods were near records.
U.S. exports, reflecting stronger growth overseas and a decline in the value of dollar in recent years, totaled $115.7 billion in April, just shy of the record high set in March. Exports to Canada and China, two major U.S. trading partners, were also second only to the records set in March.
Even so, the politically sensitive trade gap with China widened in April to $17 billion, prompting a renewed call from Democrats for the Bush administration to file a
World Trade Organization against China for alleged currency manipulation. They just won't let this one go will they? More discussion about china's role, if any, in holding the US dollar down in the FOREX forum. I will say that China needs to re-value it's currency or face big bust.....
(This post was edited by econmod on Nov 9, 2006, 1:49 PM)
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Jun 12, 2006, 7:40 PM
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