Trade Deficit Widens to $31 Billion
Wednesday, July 19th 2000, 12:00 am
By: News On 6
WASHINGTON (AP) â€” The U.S. trade deficit shot up to a record $31 billion in May as America's trade imbalance with oil-producing nations climbed to its second-highest point ever.
The Commerce Department reported Wednesday that the deficit widened by 1.8 percent in May. That compared to a $30.5 billion April imbalance, which was revised up from the government's previous estimate. May's deficit was bigger than many analysts expected.
Total imports of goods and services dipped by 0.3 percent in May to $116.8 billion. But exports fell more sharply by 1 percent to $85.7 billion, thus producing May's trade shortfall.
The U.S. deficit with oil-producing nations, including Saudi Arabia, jumped by 17.8 percent in May to $4.1 billion, second-highest on record. Imports from the Organization of Petroleum Exporting Countries rose to $5.4 billion in May, also the second-highest ever.
The quantity of crude oil imported into the United States in May, 297 million barrels, was the highest since August 1998 when 300 million barrels were imported. The price of crude oil dipped in May to $24.16 a barrel from $24.42 but is still far above the May 1999 level of $14.60 a barrel.
Production 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.
In the first five months of this year, the deficit was $147.7 billion, compared with $92.6 billion during the same period last year. For all of last year, the deficit soared to a record $265 billion.
The trade deficit is the one blot on an otherwise vibrant U.S. economy, now in its longest-ever streak of uninterrupted growth. That growth has pushed the nation's unemployment rate down to 4 percent, near a 30-year low.
The Clinton administration contends the deficit reflects the gap between American's remarkably strong economic performance and slower growth overseas.
But critics say the imbalance represents a failure of the 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.
President Clinton is pushing Congress for approval of a landmark trade agreement with China. The administration argues the market-opening trade deal would mean billions of dollars in increased sales for American companies and farmers. The House approved the China legislation in May, but the Senate has yet to act. It would grant permanent normal trade relations with China, rather than continue the current system of having Congress vote on the issue once a year.
America's deficit with China rose 8.1 percent to $6.3 billion in May even as exports to China rose to $1.5 billion, the highest since October 1998.
The politically sensitive deficit with Japan narrowed by 5.4 percent in May to $6.9 billion.
The U.S. deficit with North America climbed to a record $6.4 billion in May. And, imports from so-called newly industrialized countries, including Hong Kong, Korea and Taiwan, rose to a record $9 billion.