Newspaper article THE JOURNAL RECORD

Trade Deficit Hits Record $106.1 Billion

Newspaper article THE JOURNAL RECORD

Trade Deficit Hits Record $106.1 Billion

Article excerpt

WASHINGTON (AP) -- Americans' hearty appetite for foreign goods helped catapult the nation's trade deficit to a record $106.1 billion in the second quarter based on the broadest measure of trade.

In the April-June quarter the deficit widened 4.6 percent from an imbalance of $101.5 billion recorded in the previous quarter, the Commerce Department said Wednesday in its "current account" report on international transactions.

The current account is considered the best gauge of a country's international economic standing because it measures not only the goods and services reflected in the government's monthly trade reports, but also investment flows between countries and unilateral transfers, including U.S. foreign aid payments.

The bloated deficit, economists said, reflects the robust state of the U.S. economy, which has been growing much faster than its trading partners'.

"Our happy consumers have jobs and rising incomes and are still buying a lot of imports," said economist Clifford Waldman of Waldman Associates. "And, the healing consumers abroad -- living in counties continuing to recover from a global financial crisis in 1997 and 1998 -- aren't buying as much of our exports," he added.

America's deficit in goods widened to a record $110.2 billion in the second quarter, a 4.1 percent increase from the first quarter. However, in the services category, which measures such things as airline travel, the U.S. is running a surplus, which grew 1.1 percent to $21 billion.

An expected slowing in U.S. consumer spending next year "should dampen import growth and largely stem the rapid deterioration in the current account deficit," said Stan Shipley, economist with Merrill Lynch.

Although the overall deficit set a record in the second quarter, it was a slightly better showing than the $108 million shortfall many analysts were expecting. …

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