U.S. trade deficit reaches new high
Published 9:00 pm Thursday, November 10, 2005
WASHINGTON – The trade deficit surged to a record in September as oil imports hit an all-time high, driven up by hurricane-related shutdowns of Gulf Coast production.
The deficit with China also hit a record as that country shipped a flood of televisions, toys and clothing to the United States, triggering demands that President Bush take a hard line on what Democrats in Congress called China’s unfair trading practices.
The Commerce Department reported Thursday that September’s trade deficit was a record $66.1 billion, 11.4 percent higher than August’s and much worse than economists had been predicting.
Analysts blamed much of the rise on hurricanes Katrina and Rita, which shut down production at Gulf Coast refineries and pushed oil prices to record highs.
The trade deficit so far this year is running at a record annual rate of $706 billion, putting it on track to far surpass the old record of $617.6 billion in 2004.
Critics say the deficit is the result of the Bush administration’s free trade agreements, which reduce the cost of products for U.S. consumers but send American jobs overseas, where labor costs are lower. The United States has lost 3 million manufacturing jobs since June 2000.
In other economic news, the government reported that the number of Americans who have lost their jobs because of the hurricanes rose to 542,000 last week. The increase included 15,000 applications for jobless benefits related to Katrina and Rita, and 6,000 attributed to Hurricane Wilma, which struck Florida in October.
On Wall Street, stocks rallied, with the Dow Jones industrial average climbing 93.89 points to close at 10,640.10.
The increase in the trade deficit reflected the fact that imports jumped by 2.4 percent to a record $171.3 billion in September, driven by a $23.8 billion bill for oil imports, as well as a big increase in imports of consumer goods.
U.S. exports fell by 2.6 percent to $105.2 billion in September, the biggest monthly decline in four years. However, analysts cautioned that the drop-off was heavily influenced by the strike at Boeing, which sharply curtailed shipments of jetliners during the month.
The deficit with China jumped 8.9 percent to a record $20.1 billion; through September, it is running at an annual rate approaching $200 billion, far above last year’s record deficit of $162 billion. .
