The Commerce Department reported a rise 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 immediately went down. Analysts thought the U.S. economic recovery had slowed last quarter more than it really did. Because the trade deficit won’t become sustainable, economists are more concerned about the recession going into a double-dip.
Trade deficit because of the dollar
The Commerce Department said the trade deficit ballooned much more than analysts expected in June, following the stronger dollar made it easier for people within the U.S. to purchase cheaper exports, particularly from China. The gap widened to $ 49.9 billion, up from a revised $ 42.0 billion in May. The Washington Post reports that economists had been expecting a smaller gap after a recent drop in oil prices. Imports in June rose to $ 200.3 billion, from $ 194.4 billion in May, as U.S. shoppers bought more consumer products, auto parts and other goods from overseas. $ 150.5 billion is where exports are now from the $ 152.4 they were before. U.S. companies struggled to sell products such as industrial supplies, food and consumer goods to foreign customers.
Predictions for trade deficit wrong
A Bloomberg News survey showed that June’s expected deficit was $ 42.1 billion according to 73 economists. The decline ended up being $ 42.3 billion instead which was a 19 percent decrease. 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. The disappointing numbers prompted some economists to reduce estimates for second-quarter growth to around 1 percent to 1.5 percent.
U.S. unemployment issues more of a problem}
There are many debates on whether a double-dip recession is happening in the future with all the numbers from June’s deficit. U.S. unemployment rates should be more of the focus instead of the trade deficit reports the Christian Science Monitor. Trade deficits coexisted with domestic job growth for years prior to the recession. The more significant issue is reviving domestic consumer demand and business investment.
Some feel like unemployment rates are only as high as they’re because of the trade deficit
The Monitor article said some economists think bold efforts to fix the trade deficit could actually hurt economic recovery if they blunt the trend of expanding global commerce. The trade deficit needs to be fixed if you ask others. 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’s an economist at the University of Maryland.
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Washington Post
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