America’s Trade Deficit Continues To Increase Month on Month

By Stewart Douglas

The US trade deficit has again shown an increase on last month’s figures, a report from the US government has today shown. Despite the increase in deficit, exports have also grown by 2% from last month to record high levels, highlighting the degree to which escalating oil prices are affecting the world’s largest economy. The bulk of the trade deficit is thought to have arisen from the increasing cost of oil, and the need to import increased quantities to sustain the US economy, whilst almost a third of the imbalance has arisen from increased imports from China, including toys, foodstuffs and other consumer products. Given the level of economic growth in the region in recent years, cheap imports from China into the US have created an imbalance reflecting $20 billion in May, a 12% increase on last year’s figure.

With the price of oil increasing by over 3.5% to around $59.36 a barrel, and the non-oil related deficit growing by 1%, the seems to be no slowing in the US economic imbalance of trade, which could ultimately put further pressure on US manufacturing industries, as well as having an adverse effect on internal trade. The trade deficit has been growing rapidly since 1997 year on year, and there are no immediate signs of slowing. The deficit has been reported critically in US media, and the growing level of outgoing trade with China has been seen as negative in terms of quality assurance and general economic principles. The increasing US trade deficit coupled with an unhealthy dollar may be seen as indicative of wider economic problems, putting pressure on the monetary health of the nation. With increasing US spending in China and the Middle East on oil and manufacturing, the US economy could be on track for rising unemployment as heavy industry struggles to cope with pressures from abroad.