Odd widening with the trade deficit meaning a rise being recorded

Wall Street began going crazy after a trade deficit increase was shown Wednesday by the Commerce Department for the month of June. $ 7.9 billion was how much in June the trade deficit widened. Stocks instantly went down. Last quarter the trade deficit had slowed more than analysts thought. Some economists warn that an unsustainable trade deficit will provoke a double-dip recession.

The stronger dollar causes June trade deficit

The Commerce Department said the trade deficit ballooned much more than analysts expected in June, following the stronger dollar made it easier for individuals in the U.S. to purchase cheaper exports, particularly from China. The gap widened to $ 49.9 billion, up from a revised $ 42.0 billion in May. It was expected the gap would get smaller because oil prices have been going down, reports the Washington Post. In May imports were at $ 194.4 billion. They then rose to $ 200.3 billion in June when more consumer products, auto parts and other things were being bought out of the country. Exports then went down from $ 152.4 billion to $ 150.5 billion. U.S. companies struggled to sell products such as industrial supplies, food and consumer goods to foreign customers.

Forecasts defied by trade deficit

A Bloomberg News survey showed that June’s expected deficit was $ 42.1 billion as outlined by 73 economists. Instead of a further decline from a $ 42.3 billion trade deficit in May, the gap increased 19 percent. This is the worst of the financial crisis when going by the June trade deficit which has been adjusted by inflation to have grown 54.1 billion since February 2008. The disappointing numbers prompted some economists to lower estimates for second-quarter growth to around 1 percent to 1.5 percent.

More work needed on unemployment issues}

Economists nevertheless argue whether a double-dip recession is about to occur because of June’s deficit numbers. As outlined by the Christian Science Monitor, the trade deficit isn’t really as much of a problem as U.S. unemployment rates. Nobody cared as much about the deficit in years past when unemployment was not at all an issue. We should focus on consumer demand and business investment to help the economy.

Could unemployment be happening because of the deficit

The Monitor article said some economists think bold efforts to fix the trade deficit could actually hurt economic recovery if they blunt the trend of expanding global commerce. The trade deficit needs to be fixed if you ask others. China is responsible for almost the whole trade deficit considering all of the oil and consumer goods bought directly from them, and unemployment is bad enough as is at 10 percent within the U.S., as outlined by Peter Morici who’s an economist at the University of Maryland.

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Washington Post

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