U.S. trade deficit narrowed in July

Exports grow fast, but China gap wider

September 12, 2007|By Cox News Service

WASHINGTON -- U.S. exports are growing so rapidly that America's trade deficit narrowed a bit in July, the Commerce Department said yesterday, although the gap with China widened again.

U.S. manufacturers are increasing overseas sales of everything from high-value aircraft and telecommunications equipment to smaller items like artwork, pharmaceuticals, household goods, foods, beverages and animal feed.

As a result, growth in U.S. exports in July jumped 2.7 percent to $137.7 billion, up from the 1.3 percent growth in June.

In contrast, imports increased 1.8 percent to $196.9 billion in July. Overall, the country's trade gap shrank 0.3 percent to $59.25 billion from June's revised $59.43 billion, the report showed. That was in line with most economists' expectations.

"We are still the largest manufacturer in the world," Treasury Secretary Henry M. Paulson Jr. told reporters at a breakfast. This year, despite problems with home mortgages and a credit crunch, many Americans are benefiting from "a very strong global economy," he said.

In a written analysis, Nigel Gault, chief U.S. economist for Global Insight, a forecasting firm in Lexington, Mass., agreed that "as housing continues to decline and consumer momentum slows, strong export growth is crucial to keep the U.S. economy moving forward."

For the January-July period, U.S. exports grew 11.4 percent compared with the corresponding period in 2006.

U.S. Trade Representative Susan C. Schwab issued a statement noting that trade "has accounted for 40 percent of U.S. economic growth over the last four quarters."

The July trade news would have been even better if it weren't for higher oil import prices. Americans spent $20.34 billion for crude oil imports, up from $19.58 billion in June. The average price for a barrel of oil was up $4.61 to $65.56, the Commerce Department said.

Another problem was the continuing surge of Chinese goods, which caused the U.S. trade deficit with that country to widen to $23.8 billion, a big jump from $21.16 billion in June.

That wider gap angered trade critics who say China is unfairly holding down the value of its currency to give its manufacturers a price advantage in the global marketplace.

"The U.S. trade deficit with China is spiraling out of control," Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, said in a statement. "As long as China keeps cheating, the U.S. trade deficit with China will keep rising."

Federal Reserve Board Chairman Ben S. Bernanke, speaking in Berlin at a German central bank conference, said he'd like to see some reforms in China.

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