Trade deficit increases in February
WASHINGTON (AP) - April 10, 2008 The Commerce Department reported Thursday that the trade deficit
rose by 5.7 percent in February to $62.3 billion, the highest level
since November. Analysts had forecast that the deficit would
decline, believing that a severe economic slowdown in the United
States would cut demand for imports.
However, imports of goods and services shot up 3.1 percent to an
all-time high of $213.7 billion, reflecting a big surge in imports
of foreign cars. Exports also set a record, rising by 2 percent to
$151.4 billion, reflecting strong gains in the sale of
American-made heavy machinery, computers and farm goods.
In other economic news, the number of newly laid off workers
filing claims for unemployment benefits fell sharply last week
after having hit the highest level in more than two years in the
previous week. The Labor Department said that applications for
jobless benefits totaled 357,000 last week, down by 53,000 from the
previous week, but the four-week average moved to the highest level
since October 2005.
Meanwhile, the nation's retailers reported mixed results in
March. Wal-Mart and Costco Wholesale Corp. were among the best
performers. Other retailers reported that their sales suffered from
the weak economy and an early Easter that dampened clothing sales.
On Wall Street, investors were generally encouraged by the batch
of economic reports and pushed stocks higher after two days of
losses.
The rise in the trade deficit gave ammunition to critics who
contend that the Bush administration's policies have helped lose
more than 3 million manufacturing jobs since January 2001, as the
trade deficit set records for five consecutive years.
"Wages are falling and the middle class is shrinking because of
trade deficits," James Hoffa, president of the International
Brotherhood of Teamsters, said Thursday at the end of a three-day
"Working Class Convoy for Change" in Pennsylvania.
Hoffa, who is supporting the presidential candidacy of
Democratic Sen. Barack Obama, was touring Pennsylvania ahead of
that state's April 22 presidential primary to highlight job losses
and financial devastation that his union attributes to unfair
foreign competition.
Trade is shaping up as a key issue in the upcoming presidential
campaign and in the fight for control of Congress. Republicans
contend that free trade is boosting U.S. export opportunities,
while Democrats contend that Republicans have not done enough to
protect American workers from unfair foreign competition.
Bush sent Congress a free trade agreement with Colombia on
Monday, using authority which would require Congress to act on the
measure within the next 90 legislative days. But House Speaker
Nancy Pelosi was set to get the House to vote to suspend the
fast-track process, contending that the Colombia deal cannot be
approved until lawmakers are satisfied that the country has done
enough to halt violence against union organizers.
For the first two months of this year, the trade deficit is
running at an annual rate of $727.6 billion, up from last year's
deficit of $708.5 billion, which had been the first decline in the
deficit after five consecutive annual records.
Analysts, who believe the country has fallen into a recession,
expect the trade deficit will decline again this year as slumping
demand in this country cuts into imports while a weak dollar
against other currencies boosts sales of American products
overseas.
For April, the politically sensitive deficit with China dropped
by 9.6 percent to $18.4 billion, the lowest imbalance in a year.
The improvement reflected big declines in imports of computers,
cell phones and other telecommunications equipment, and clothing.
Even with the decline, the U.S. deficit with China remained the
largest with any country. The next highest deficit was an imbalance
of $6.9 billion with Japan.
The deficit with Saudi Arabia totaled $3.5 billion, while the
imbalance with all OPEC nations totaled $13.2 billion.
America's foreign oil bill fell 5.7 percent to $37.7 billion. It
was the first decline since February 2007 and occurred even though
the average price for imported crude oil hit a record of $84.76 in
February. With crude oil prices hitting record highs on the spot
market above $100 per barrel, analysts believe the petroleum bill
will resume rising in coming months.
The deficit with the European Union rose to $6.9 billion in
February, up 13.5 percent from January, even though U.S. exports to
Europe hit an all-time high, reflecting the fact that a decline in
the dollar to record lows against the euro has boosted the price
competitiveness of American products.