US Trade Gap Increased by High Oil Prices
Because of the higher oil prices that have affected imports and exports, the trade deficit of the US has reached in May a value which is the highest since October 2008.
The deficit has in fact increased by 15 percent. In April 2011 its value was of $43.6 billion and in May it reached $50.2 billion. These figures were released by the commerce department and are well beyond the $44.1 billion estimated by a group of economists who were the subject of a Bloomberg survey.
Overall, imports have increased by 2.6 percent and have reached the amount of $225.1 billion a little below the record of $231.16 billion which belongs to July 2008. This increase was mostly due to the rising prices of oil. In May, petroleum imports increased by 10.3 percent and were closely followed by oil imports because of the price of $108 paid for each barrel.
The imports also increased because the US had to import more industrial supplies, food and beverages and capital goods. In the same time, the interest of Americans towards foreign cars has started to increase after it declined in March due to the earthquake that affected Japan. Therefore, the import of foreign cars meant $0.6 extra billion and accumulated per total $19.6 billion.
While imports rose, exports declined 0.5 percent to $174.9 billion. The decrease followed the record level reached in April, but even if it wasn’t significant, the numbers weren’t high enough to balance the imports. The situation was mostly due to the fact that the demand of food, beverages, industrial supplies and materials produced in the US decreased overseas. The only exports that increased to $1.2 billion were those of capital goods.
Even if for now the situation seems complicated, Ian Shepherdson, who works as economist at High Frequency Economics, said that even if “the trend in export growth is still faster than that of imports”, the near future may be filled with surprises because it’s hard to accurately predict the outcome.
Also important is that the trade gap with China has increased by 16 percent and has reached $25 billion. That’s mostly because the level of imports in the US has become higher than that of exports. In the same time, the figures provided by Beijing show that China’s import growth has slowed down significantly in June. This has raised many concerns, because we are talking about the largest economy in Asia. Let’s just hope that the future will prove economists and experts they were wrong.11