|03-11-2005, 06:23 PM||#1|
Angling in the Deep
Join Date: Oct 2003
Location: Texas Riviera, Southern Mountains
Trade Deficit 2nd Largest In History
Further evidence of America exporting the dollar to China.
By Tim Ahmann
WASHINGTON (Reuters) - The U.S. trade gap widened to a near-record $58.3 billion in January as the seemingly insatiable appetite of U.S. consumers pushed imports to an all-time high, a government report showed on Friday.
Imports jumped 1.9 percent to a record $159.1 billion, the Commerce Department (news - web sites) said, swamping a 0.4 percent rise in exports, which also set a record at $100.8 billion.
January's trade shortfall came in second only to November's record $59.4 billion gap and surprised economists, who had expected the deficit to widen only slightly to $56.5 billion.
The value of the U.S. dollar, which has been under pressure amid steadily mounting trade and budget gaps, dropped on the data, leading bond prices lower as traders fretted a weaker greenback might push up inflation. Stock prices also closed lower as investors eyed rising interest rates warily.
The report signaled a continued strong appetite by U.S. consumers and reflected, in part, a climb in textile imports from China that U.S. textile groups said reflected the Jan. 1 end to a decades-old international quota system.
Some analysts had expected an increase in oil prices to contribute to a widening in the deficit, but the department's oil price measure actually slipped to $35.35 a barrel, the lowest since July, from $36.63 in December.
The oil price drop pulled the overall value of oil imports down, although any relief may be short-lived as benchmark crude prices have recently been trading around $55 a barrel. Some analysts said the rise in oil prices virtually assured November's trade gap record would soon be broken.
Excluding petroleum, the U.S. trade gap grew by 7.5 percent in January to a record $46 billion.
"Most of the surprise was on the import side, in particular imports of consumer goods. There is very strong domestic demand and stores are reloading," said Stephen Stanley, an economist at RBS Greenwich Capital Markets.
Still, the report suggested first-quarter economic growth might prove a touch weaker than economists had thought, since so much consumer demand was being satisfied by foreign goods.
Imports of consumer goods jumped $2 billion to a record $34.6 billion and imports of autos and capital goods were also up sharply, each gaining more than $500 million.
The U.S. trade shortfalls with Canada and the newly industrialized countries of Asia both widened by $1.3 billion, as exports fell off and imports climbed.
The gap with China -- the country that enjoys the largest trade surplus with the United States -- grew $1 billion, as exports dropped nearly 20 percent and imports edged up 1.9 percent.
U.S. imports of textiles and apparel from China shot up about 41 percent to $1.89 billion, according to detailed data released in conjunction with the trade report.
Textile groups in the United States and European Union (news - web sites) have been worried textile imports from China would surge and have been pushing their governments to enact new curbs.
Commerce Department officials said Washington was concerned about the increase and its impact on U.S. textile firms and would consider curbs if it sees evidence of market disruption.
U.S. textile groups had said some of the feared surge might not be apparent until February, because January import figures might partly reflect goods shipped in December.
In contrast, Chinese officials have said some Chinese exporters may have held back shipments in December to enjoy the better trade treatment January would bring. U.S. figures show Chinese textile imports had dropped about 11 percent from November to December.
|03-12-2005, 04:08 AM||#2|
Mo' holla fo' yo' dolla!
Join Date: Dec 2002
Location: In a bunker in an undisclosed location
And it will likely happen within the next few years.
"At the time of the 1929 stock market crash, total US credit was 176 percent of Gross Domestic Product. In 1933 with GDP imploding and the real value of debt rising even faster, total credit rose to 287 percent of what was left of GDP…In 2000 at the top of the late bull market, total credit was 269 of GDP. An extraordinary statistic to be sure but dwarfed by today's figure, in which total credit stands at a whopping 304 percent of GDP, according to a recent study by fund manager Trey Reik of Clapboard Hill Partners."
- Marshall Auerback
"Below the favorable surface [of the economy], there are as dangerous and intractable circumstances as I can remember…. Nothing in our experience is comparable… But no one is willing to understand this and do anything about it… We are consuming… about six per cent more than we are producing. What holds the world together is a massive flow of capital from abroad… it's what feeds our consumption binge… the United States economy is growing on the savings of the poor… A big adjustment will inevitably become necessary, long before the social security surpluses disappear and the deficit explodes… We are skating on increasingly thin ice."
- Paul Volcker, former Federal Reserve Chair