US Trade Deficit Hits Record $56bn High

17 August 2004

The US Commerce Department reported a record trade deficit for the month of June as imports rose to a $148.6 billion (€120.4bn; £80.6bn) high and exports fell to $92.8bn – their lowest level in almost three years.

Rising oil prices contributed to the overall import increase of 3%, while the trade imbalance with China yawned to a record $14.2bn.

Although economists had predicted a net global deficit of $47bn, the size of the $55.8bn gap (+19%) is far wider than expected -- an especial cause for concern as it implies the US economy is slowing more significantly than had been realised.

Dresdner Kleinwort Wasserstein analyst Kevin Logan described the figures as 'extraordinary', adding "I've never seen this big a swing in one month."

As the US dollar fell in response, analysts such as Rebecca Patterson of investment bank J P Morgan also fear the government is likely to instruct a "major downward revision to second quarter GDP."

The 'disturbing' news was matched by the gloomy outlook of US consumers who are concerned about economic prospects following oil price hikes, fewer job opportunities and security fears.

Data sourced from: BBC Online Business News (UK); additional content by WARC staff