Trade deficit widens unexpectedly to record one-month increase

The Commerce Department reported an increase in the U.S. trade deficit in June on Wednesday causing Wall Street to freak out. $ 7.9 billion was how much in June the trade deficit widened. Stocks nose-dived at the news. Analysts thought the U.S. economic recovery had slowed last quarter more than it really did. Some economists warn that an unsustainable trade deficit will provoke a double-dip recession.

June U.S. trade deficit caused by strong dollar

According to the Commerce Department, this change in the deficit happened in June because those within the U.S. began getting cheaper exports from China, making the U.S. dollar stronger. $ 49.9 billion was where the gap went from $ 42.0 billion in May. It was expected that the gap would get smaller because oil prices have been going down, reports the Washington Post. In May imports were at $ 194.4 billion. They then rose to $ 200.3 billion in June when more consumer products, auto parts and other things were being bought out of the country. $ 150.5 billion is where exports are now from the $ 152.4 they were before. In June, companies had a hard time selling their industrial supplies, food and consumer goods to anyone outside of the country.

Trade deficits widens which wasn’t expected

The anticipated trade deficit for June was $ 42.1 billion — the median forecast of 73 economists in a Bloomberg News survey. There was a 19 percent increase in the gap when it declined instead to $ 42.3 billion. Bloomberg reports the June trade deficit adjusted for inflation, which is the figure used to calculate gross domestic product, increased to $ 54.1 billion, the highest since February 2008 during the worst of the financial crisis. This has caused economists to lower their estimates from 1 to 1.5 percent in the second quarter.

Unemployment a bigger issue}

Economists don’t agree on whether the trade deficit in June’s sudden and marked increase means the U.S. is in danger of heading into a double-dip recession. As outlined by the Christian Science Monitor, the trade deficit is not as much of a problem as U.S. unemployment rates. Trade deficits coexisted with domestic job growth for years prior to the recession. We should focus on consumer demand and business investment to help the economy.

Numerous nevertheless think unemployment would decrease with better trade deficits

According to the Monitor article, numerous economists think that fixing the trade deficit might hurt the economic recovery by hurting global commerce. Other economists think the trade deficit problem has got to be worked on. China is responsible for almost the whole trade deficit considering all of the oil and consumer goods bought directly from them, and unemployment is bad enough as is at 10 percent within the U.S., as outlined by Peter Morici who is an economist at the University of Maryland.

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Washington Post

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