Trade deficit widens unexpectedly to record one-month increase

The Commerce Department reported a rise in the U.S. trade deficit in June on Wednesday causing Wall Street to freak out. Although the trade deficit within the U.S. had been narrowing, it was shown in June to widen by $ 7.9 billion. Stocks instantly went down. Last quarter the trade deficit had slowed more than analysts thought. As the trade deficit won’t become sustainable, economists are more concerned about the recession going into a double-dip. Article resource – Trade deficit widens unexpectedly to record one-month increase by Personal Money Store.

Trade deficit because of the dollar

As outlined by the Commerce Department, this change in the deficit happened in June because those within the U.S. started purchasing cheaper exports from China, making the U.S. dollar stronger. The gap widened to $ 49.9 billion, up from a revised $ 42.0 billion in May. 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 fell to $ 150.5 billion from $ 152.4 billion. In June, companies had a hard time selling their industrial supplies, food and consumer goods to anybody outside of the country.

Trade deficits widens which was not expected

A Bloomberg News survey showed that June’s expected deficit was $ 42.1 billion as outlined by 73 economists. There was a 19 percent increase within the gap when it declined instead to $ 42.3 billion. As outlined by Bloomberg, the number used to calculate gross domestic product, or trade deficit, when adjusted for inflation increased 54.1 billion since 2008 in February. This has caused economists to reduce their estimates from 1 to 1.5 percent within the second quarter.

More work needed on unemployment issues}

You will find many debates on whether a double-dip recession is happening in the future with all of the numbers from June’s deficit. U.S. unemployment rates should be more of the focus instead of the trade deficit reports the Christian Science Monitor. Nobody cared as much about the deficit in years past when unemployment was not at all an issue. Consumer demand and business investment should be what we are focused on.

Numerous nevertheless think unemployment would decrease with better trade deficits

If global commerce is hurt since the U.S. fixes the trade deficit problem, economists are concerned that economic recovery might just take longer, reports the Monitor article. The trade deficit needs to be fixed if you ask others. 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’s an economist at the University of Maryland.

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Washington Post

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