Mixed Messages on US Economy

16 October 2006

WASHINGTON DC: Confusion appears to reign about the health of the US economy as some economists find fighting fitness, while the prognosis from others is gloomier.

The Federal Reserve's latest Beige Book survey, which studies economic conditions in twelve regions across the USA, says four areas saw strong growth and six saw moderate or mixed expansion in September.

But the country's trade balance could be a more worrying symptom, both for economists and their political masters.

The deficit was $69.9 billion (€55.6bn; £37.5bn) in August, up from July's $68bn level, the Commerce Department says.

It is on course to set a new record, totalling $784.2bn at the end of August, 9.4% higher than a year ago.

The total value of imports rose by 2.4% to $192.3bn in August, while exports rose by 2.3% to $122.4bn.

The figures are expected to improve for the final quarter of the year, following the slide in gasoline prices. However, the damage to the Bush administration may already be done as it faces mid-term elections next month.

The Democrats are arguing "imbalance" long and loud, and especially that the shortfall with China is evidence of the Republicans' mishandling of trade and economic issues.

The Commerce Department also released unemployment figures late last week showing the number of new applications for unemployment welfare rose by 4,000 to 308,000.

Data sourced from BBC Online; additional content by WARC staff