U.S. Trade Deficit Widens to $30.6B
Friday, August 18th 2000, 12:00 am
By: News On 6
WASHINGTON (AP) â€” America's trade deficit widened to a record $30.6 billion in June as U.S. imports of industrial supplies and crude oil increased and crude-oil prices reached a near-10-year high.
The deficit rose from May's $30.3 billion, which was revised down from the government's previous estimate of $31 billion, the Commerce Department reported Friday.
While the June trade gap was a record, it was far smaller than the $31.7 billion many economists had expected.
``It seems to have stabilized,'' said Gerald Cohen, a senior economist at Merrill Lynch & Co. in New York.
Looking ahead, Bill Cheney, chief economist at John Hancock Financial Services Inc. in Boston, said he doesn't foresee any dramatic improvement or worsening of the deficit. ``On the whole, I think the more likely scenario is a very gradual narrowing,'' he said.
Total imports of goods and services were up by $4.3 billion to $121.2 billion in June, an all-time record. Exports increased by $4 billion to a record $90.6 billion.
The increase in June's imports mostly reflected a jump in shipments of crude oil â€” which rose $1.6 billion to a record $8 billion â€” automobiles, parts and engines, and consumer goods such as televisions, VCRs, stereos and toys. And imports of capital goods, including computer accessories and semiconductors, were up $0.8 billion.
On the export side, the increase came from stronger demand for capital goods, which jumped $2.1 billion to a record $31.2 billion, and industrial supplies, up $0.7 billion.
For the first six months of the year, the trade deficit has averaged $177.6 billion, surpassing $116 billion for the same period last year.
Exports rose to $518.7 billion during the first six months of the year from $465 billion in the same period in 1999.
Economists believe the bloated deficits reflect the gap between America's remarkably strong economic performance and slower growth overseas.
But critics say the imbalance reflects a failure of the Clinton administration's trade policies, which they believe have left American workers at the mercy of foreign nations with lower labor costs and lax environmental standards.
The trade deficit is the sole blot on an otherwise vibrant U.S. economy, now in its longest-ever streak of uninterrupted growth.
In June, the amount of crude oil imported into the United States, 300.9 million barrels, was the highest since August 1998, when 300 million barrels were imported. The price of crude oil jumped from $24.16 a barrel in May to $26.65 in June, its highest level since November 1990, and is far above the June 1999 level of $14.52 a barrel.
Output limits by oil-producing nations have pushed crude-oil prices up over the last year. But many analysts believe prices will ease in the coming months on the expectation that production will eventually be increased.
The U.S. deficit with oil-producing nations, including Saudi Arabia, jumped from $4.1 billion in May to $4.6 billion in June, a new record. Imports from the Organization of Petroleum Exporting Countries rose to $6.03 billion in June from $5.4 billion in May.
America's deficit with China rose to a record $7.2 billion from $6.3 billion in May as exports to China fell from $1.5 billion in May to $1.3 billion in June.
President Clinton has been pushing Congress for approval of a landmark trade agreement with China. The administration argues that the market-opening trade deal would mean billions of dollars in increased sales for U.S. companies and farmers. The House approved the China legislation in May, but the Senate â€” which returns for a short work session early next month â€” has yet to act.
The politically sensitive deficit with Japan narrowed to $6.3 billion in June from $6.9 billion in May.
The U.S. deficit with major trading partners Canada and Mexico widened to a record $6.6 billion in June. Imports from so-called newly industrialized countries, including Hong Kong, Korea and Taiwan, ballooned to a record $9.7 billion from $9 billion in May.
On the Net:
The trade report: http://www.bea.doc.gov/bea/newsrel/trad0500.htm