Deficit in monthly trade report in­creased

Trade

Austin American-Statesman - - BUSINESS - Con­tin­ued from B

much of Europe into re­ces­sion. The re­gion ac­counts for about one­fifth of U.S. ex­port sales. And other ma­jor ex­port mar­kets, in­clud­ing China, In­dia and Brazil, have ex­pe­ri­enced slower growth.

The cur­rent ac­count deficit hit an all-time high of $800.6 bil­lion in 2006. It then shrank af­ter a deep re­ces­sion re­duced U.S. de­mand for for­eign goods by a greater amount than U.S. ex­port sales di­min­ished. The trade gap be­gan wi­den­ing again af­ter the re­ces­sion ended in June 2009.

The im­prove­ment in the cur­rent ac­count in the third quar­ter re­flected a de­cline in the deficit on goods and a small in­crease in the sur­plus on ser­vices, led by a gain in for­eign earn­ings made by U.S. com­pa­nies pro­vid­ing fi­nan­cial ser­vices, in­surance and pro­fes­sional ser­vices. The sur­plus on in­vest­ment earn­ings nar­rowed to $50.8 bil­lion, down from $52.1 bil­lion in the sec­ond quar­ter.

The deficit in the monthly trade report, which just tracks mer­chan­dise and ser­vices, in­creased in Oc­to­ber as U.S. ex­ports fell by a larger mar­gin than im­ports, a devel­op­ment that was seen as a sign that slower global growth was be­gin­ning to weigh on the U.S. econ­omy.

The over­all econ­omy grew at an an­nual rate of 2.7 per­cent in the Ju­lySeptem­ber quar­ter, but many econ­o­mists be­lieve growth has slowed to less than 2 per­cent in the cur­rent quar­ter. They be­lieve that con­sumers and busi­nesses have grown more cau­tious about spend­ing and mak­ing in­vest­ments be­cause of the un­cer­tainty over what Congress will do about the “fis­cal cliff.”

That is the term used for the in­creases in taxes and spend­ing cuts that will oc­cur au­to­mat­i­cally in Jan­uary un­less Congress and Pres­i­dent Barack Obama reach a bud­get deal to avert them. Econ­o­mists have warned that the ad­verse im­pact on the econ­omy will be great enough to push the coun­try back into a re­ces­sion.

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