BBC: US deficit swells, no explanations offered!
From: Intelli Gence (vd1739_at_hotmail.com)
Date: 08/16/04
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Date: Mon, 16 Aug 2004 11:16:43 +1000
This is unbelievable, no body cares to explain why such a wacky thing has
happened to US, not even a single darn economist!
US trade deficit swells in June
The US trade deficit has unexpectedly swollen by 19% to a record $55.8bn
(£30.4bn) in June.
The country suffered the biggest drop in exports in nearly three years, just
as imports hit record levels.
Wall Street economists had expected the gap to widen, but had predicted a
gap of just $47bn.
Economists said the growing deficit was likely to force the government to
revise downwards its forecast of 3% economic growth in the second quarter.
Under pressure
The deficit rise may increase the pressure on President Bush and his
handling of the economy ahead of the Republican Party Convention later this
month.
The figures are the latest in a series of worse than expected economic
reports in recent weeks.
US exports fell by 4.3% to $92.8bn (£50.4bn) in June, their largest monthly
fall since September 2001.
Imports rose 3% to $148.6bn, partly reflecting the steady rise in crude oil
prices.
It's extraordinary. I've never seen this big a swing in one month
Kevin Logan, Dresdner Kleinwort Wasserstein.
The country's trade deficit with China widened to a record $14.2bn as
Chinese imports rose to a record high.
The US dollar fell on the news, while the value of US bonds rose as traders
said the data suggested that interest rate rises would be less aggressive
than previously thoughts.
The widening deficit came as a shock to Wall Street.
"It suggests a major downward revision to second quarter GDP. It's obviously
dollar-negative," said Rebecca Patterson of JP Morgan.
Kevin Logan, an analyst with Dresdner Kleinwort Wasserstein, described the
figures as "extraordinary".
"I've never seen this big a swing in one month," he said.
Falling confidence
"Perhaps the most disturbing news would be the deep drop by exports, where
the earlier rise in exports supplied important support to the US
manufacturing sector," said John Lonski, chief exconomist at Moody's
Investors Service.
Data released on Friday also showed that US consumers are less confident
about their economic prospects than they were last month.
The University of Michigan Index of Consumer Sentiment dropped from 96.7 in
July to 94 in August.
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