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How explosive is the Trade Gap crisis?

*AP, by Martin Crutsinger, October 12, 2006

Soaring Oil Prices Push Trade Deficit to Another Record in August

“America’s trade deficit hit an all-time high as record imports of oil swamped a solid gain in U.S. exports. The politically sensitive deficit with China set a record, a point that Democrats are sure to use in attacking President Bush’s trade policies in the closing weeks of the battle for Congress.

The deficit rose to $69.9 billion in August, up 2.7 percent from July’s $68 billion deficit, which had also been a record. The sharp deterioration in the deficit in recent months has occurred because soaring global oil prices have pushed America’s foreign oil bill to historic highs.

Analysts believe the deficit will begin to show improvements in coming months, reflecting the fact that oil prices, which had surged to $77 per barrel in July, have fallen by about 25 percent since that time.

In a second report, the number of newly laid off workers filing for unemployment benefits rose by 4,000 last week to a seasonally adjusted total of 308,000.

The widening trade gap occurred even though U.S. exports of goods and services set a record, rising by 2.3 percent to $122.4 billion. This increase, however, was offset by a 2.4 percent rise in imports, which also set a record at $192.3 billion.

The trade deficit is on track to set a record for a fifth consecutive year, running at an annual rate through August of $784.2 billion, 9.4 percent higher than last year’s $716.7 billion record.”

*This information is solely an excerpt of a third-party publication and is incomplete. Please subscribe to the referenced publication for the full article. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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