July Trade Deficit Climbs 16.3 Percent To $32 Billion

WASHINGTON — The U.S. trade deficit shot up in July to the highest level in six months as a surge in shipments of foreign oil and autos pushed imports up by a record amount.

The Commerce Department said Thursday that the trade deficit rose 16.3 percent to $32 billion in July, much larger than the $27.4 billion imbalance that economists had expected. It was the largest imbalance since January and the percentage increase was the biggest in more than a decade.

Imports rose by 4.7 percent, the largest monthly advance on records that go back to 1992, while exports edged up by a smaller 2.2 percent. Both gains provided evidence that the most severe recession since World War II was beginning to lose its grip on the global economy.

The increase in imports pushed them to a total of $159.6 billion in July and marked the second consecutive monthly gain after imports had fallen for 10 straight months as demand in the United States plummeted in the midst of the prolonged recession.

The rebound in July reflected a 21.5 percent spike in imports of autos and auto parts, a gain that reflected in part a rebound in production at U.S. auto plants owned by General Motors and Chrysler. Those companies had curtailed production in May and June as they struggled to emerge from bankruptcy protection. Both companies as well as foreign automakers with plants in the United States make use of foreign-made auto parts in their U.S. manufacturing operations.

Foreign oil imports also rose in July, climbing by 3.6 percent to $22.4 billion, the highest total since December, reflecting as the volume of shipments increased and the average price for an imported barrel of crude oil rose to $62.48 in July, up from $59.17 in June. It was the highest price for crude since last November but still well below the records approaching $150 per barrel set in the summer of 2008.

America's foreign oil bill is expected to rise further in the months ahead given that world oil prices have continued to climb. Oil was trading near $72 per barrel on Thursday.

Exports were up as well in July, climbing to $127.6 billion. It marked the third consecutive monthly increase in exports but left them well below their record level of $164.4 billion set in July 2008.

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The export gains in July reflected big increases in shipments of civilian aircraft, computers, industrial machinery and medical equipment.

U.S. companies have been battered by the drop in demand in the United States and in major export markets as the recession that began in the United States spread worldwide. However, economists are hoping that a rebound in global economies as well as further weakening in the value of the dollar will help boost exports in coming months. A weaker dollar makes U.S. products less expensive in overseas markets.

The politically sensitive trade deficit with China rose by 10.8 percent in July to $20.4 billion but so far this year is running 14 percent below last year's all-time high.

The increase in the July deficit marked the second consecutive month it has increased after hitting a nearly nine-year low of $26.4 billion in May. The June deficit was revised up slightly to $27.5 billion.

So far this year, the deficit is running at an annual rate of $355.5 billion, just half of last year's total deficit of $695.9 billion. Economists believe the deficit will keep rising in the months ahead, reflecting stronger growth in the United States and rising oil prices.

Economists see the widening trade deficit as further evidence that the recession is coming to an end and they expect the imbalance in 2010 will be approaching the levels seen before the recession hit.

America's deficit with Canada, the country's largest trading partner, surged by 41.7 percent in July to $2.2 billion, up from $1.5 billion in June. The deficit with the European Union jumped by 76.5 percent to $8 billion while the deficit with the Organization of Petroleum Exporting Countries rose by 18.5 percent to $6.9 billion. The imbalance with Mexico fell by 14.4 percent to $2.9 billion.

Comments

[yourlibral]

..Everyday it's the same old rethreads. NO change form Washington.

good articles: http://www.iamned.com ......

[yourlibral]

Everyday it's the same old rethreads. NO change form Washington.

good articles: http://www.iamned.com ....

[liberal politics]

This more than anything else is why I don't trust Obama anymore.

The moment it became clear he wasn't going to fight to actually clean up the financial industry is the moment it became clear that the hope and change rhetoric was just that, rhetoric. All he cares about is keeping corporate money in dem hands, he doesn't dare anger his corporate sponsors.

good articles 4 slow news day: http://www.iamned.com

the system needs to be overhauled cuz nothing seems to change

[Joseph Joyal]

Thank you cash for clinkers and the gready bastards of OPEC. Why don't we trade one bushell of wheat for one barrel of oil.
We still produce food for the world and should use that to our advantage,
NO more Mr. Nice Guy

[Viper]

Every dollars that goes for an imported item, is a $5 hit to our economy...­. Thats the effect of the loss of 1 dollar of MFG capital.

So when you complain about not having a job, declining wages and budget deficits..­.. remember what the real cost of that imported car or other item really is to you... Not such a bargain, now is it?


Regards

[EdCoughlin]

To all the limousine liberals who talk a good game about union support and then buy a Volkswagon, BMW or Lexus thanks for this.

That goes double for all you American flag waving America first conservatives driving around in Toyota Tachomas. Maybe start supporting your country with the biggest purchase you make every 4 years.

America makes very good, very well rated cars from the top rated Fusion and Malibu to the most fuel efficient SUV on the road (the 2010 Equinox I own which gets 32 MPG highway without even using hybrid tech). If a few more people could get past illogical ignorance and take a better look at the quality products made right here in the US and Canada by union workers making decent wages with quality benefits maybe we wouldn't be in such dire straits.

Thanks guys for supporting the economic recovery in Japan, Korea and Germany (all of which are recovering faster then us, thanks in part to these auto numbers).

[drymartini1]

Patriotism is the final resort of scoundrels !!

so leave the patriotism out the door and talk something else.

[themodernleader]

mamacat. You state a fact that nourishes American delusion. Producing an automobile takes highly skilled employees and technological advancement. Assemblying an automobile is the work of robots and declining intelligence. I have known your fact from the start of foreign penetration of our markets.

[Realization]

Where were the robots made?

[netzwerg]

Germany and Switzerland make most of them:

http://www.kuka-robotics.com/germany/de/

http://www.abb.com/

[FreedomCorpse]

$32 billion out of the country...­each month with slight variation.­..and somehow politicians haven't seen a problem with this for 20 years.

[blueskybigstar]

Without taxes on energy and regulations to keep down fuel use, all of our stimulus money goes out the window.

[mamacat]

Foreign autos and foreign oil pushed up the trade deficit.
So, let's make better cars here, and lets keep pushing for alternative energy development. The biggest seller was the Toyota Corolla, many of them assembled here. At my local Ford dealer, they just about ran out of Ford Focuses. Interesting.

[EdCoughlin]

A) most of the best selling Toyotas are either only assembled here (meaning all the parts work, which is most of the jobs, goes oversees) or are made entirely in Japan (the Prius for one).

B) even if it is made here, the profits go overseas and into the economy of Japan or Germany instead of the US. This allows those companies to make more cars and pay their workers who spend in foreign economies. All cars built here are not created equal. They also are union busters, all the big foreign auto makers, and pay very few taxes thanks to all the incentives they squeeze out of states.

"It may have been assembled here" is no justification for buying a Camary if you're going to make any kind of America first argument. All the parts going into the Toyota still count against the trade deficit and the Japanese market remains just as closed to American goods as its ever been. Lose lose, like always.

[drymartini1]

The world only needs two types of cars.

Honda Accord and Toyota Camry.

dont tell me to give up my camry ok.

Besides, last time i checked, Toyota and Honda have plants in the US. and Last i knew people from the southern states (where the plants are) are americans too.

besides, stick a fork in Michigan. its dead anyways

[liberal user]

There needs to be more than a backlash. When people who barely survive on welfare break the rules, there are reimbursement bills, penalties, prosecution, and loss of benefits. If Goldman Sachs proportionately met with justice, we would have to stretch our imaginations to determine how they could pay for their astronomical crimes.

good articles 4 for slow news day: http://www.iamned.com

[themodernleader]

The recent allocation of about $8 billion for auto purchasing grew our country's trade deficit. Eighty percent of the autos sold were foreign made. It didn't produce any American jobs worth mentioning.
President Obama must turn away from mercantelism towards a policy of self manufactured goods and machines. We must put our people back to work on other than shuffling paper to build debt.
When will this banking-owned Administration change course? It is already very late. Nevertheless, we must change course or perish.
We are bleeding jobs and manufacturing at an unprecedented rate. The economic disaster is happening in slow motion. Mild-prolonged decline is much more harmful and destructive than short-intense crashing. We are living in an unconscious state of mortal injury. Our incompetent leaders deny our peril. Wake up or die.

[mamacat]

Do a fact check, most of the vehicles sold were made (or at least assembled) in North America.

[Realization]

Being happy about that "assembled" is one of the major mistakes the U.S. has made. "Assembled" (meaning that all important parts, design, development, and profits go somewhere else) means a competitor has control. In the cases of autos, it is countries that targeted the industry and protected/supported their industries while the U.S. was open.

"Assembled" is something that should make a developing country happy - for a short time until they moved up the ladder. The U.S. is the only country that doesn't get this basic point so we are needlessly losing an industry.