Odd widening with the trade deficit meaning a rise being recorded

Wall Street went into a panic Wednesday as the Commerce Department reported a sharp increase within the U.S. trade deficit in June. Although the trade deficit in the U.S. had been narrowing, it was shown in June to widen by $ 7.9 billion. Stocks immediately went down. Analysts thought the U.S. economic recovery had slowed last quarter more than it really did. The recession could go into a double-dip with the trade deficit so unstable.

June U.S. trade deficit caused by strong dollar

According to the Commerce Department, this change in the deficit happened in June because those in the U.S. began purchasing cheaper exports from China, making the U.S. dollar stronger. May was when the gap went from $ 42.0 billion to $ 49.9 billion. The Washington Post reports that economists had been expecting a smaller gap after a recent drop in oil prices. There were more purchases of consumer products and auto parts from out of the country in June raising imports from the $ 194.4 billion it was in May to $ 200.3 billion. Exports then went down from $ 152.4 billion to $ 150.5 billion. In June, companies had a hard time selling their industrial supplies, food and consumer goods to everyone outside of the country.

Trade deficit widens to defy forecasts

The anticipated trade deficit for June was $ 42.1 billion — the median forecast of 73 economists in a Bloomberg News survey. The decline ended up being $ 42.3 billion instead which was a 19 percent decrease. This is the worst of the financial crisis when going by the June trade deficit which has been adjusted by inflation to have grown 54.1 billion since February 2008. The disappointing numbers prompted some economists to reduce estimates for second-quarter growth to around 1 percent to 1.5 percent.

More difficulties come from unemployment}

Economists don’t agree on whether the trade deficit in June’s sudden and marked increase means the U.S. is in danger of heading into a double-dip recession. As outlined by the Christian Science Monitor, the trade deficit isn’t really as much of a problem as U.S. unemployment rates. Before the recession, deficits were still here but weren’t noticed as much. We should focus on consumer demand and business investment to help the economy.

Many still think unemployment would decrease with better trade deficits

According to the Monitor article, many economists think that fixing the trade deficit might hurt the economic recovery by hurting global commerce. Other economists think that the trade deficit problem has got to be worked on. 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 in the U.S., as outlined by Peter Morici who is an economist at the University of Maryland.

Additional reading

Washington Post

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