Newspaper article THE JOURNAL RECORD

Soaring Trade Deficit Continues to Stifle Nation's Economy

Newspaper article THE JOURNAL RECORD

Soaring Trade Deficit Continues to Stifle Nation's Economy

Article excerpt

The nation's soaring trade deficit continues to take its toll on the economy, which grew at a feeble 2.0 percent annual rate in the spring, the government said Tuesday.

That expansion rate for the gross national product, the value of the nation's total output of goods and services, was a slight upward revision of an earlier estimate of 1.7 percent growth for the period from April through June.

The trade deficit, which is predicted to hit a record $150 billion, is blamed as the reason for the sharp slowdown in activity this year. Domestic manufacturers have lost sales and have cut production amid a flood of imports.

Separately, the government said Monday that Americans' personal income rose 0.4 percent in July, mainly because of a big jump in Social Security benefits.

The Commerce Department also said Monday that consumer spending advanced 0.4 percent in July, but many private economists predicted that Americans will likely begin to spend less because of the slowdown in income growth.

Meanwhile, a report by the U.S. League of Savings Institutions said adjustable-rate mortgage loans account for more than half of the home loans being made by savings institutions.

It said borrowers are choosing ARMs with interest rates linked to a more volatile index than they were using a year ago.

That could make borrowers more vulnerable to a sudden rise in rates, the study said.

About 60 percent of the increase the government reported in income came from a rise in government payments to individuals. The bulk of this was a $5 billion growth in retroactive Social Security payments that resulted from a recalculation of benefits for people who are still working while drawing payments.

In contrast, wages and salaries, the key factor in the economic decisions made by the average family, grew by the smallest amount this year, a slight $1.7 billion, far below the $10. …

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