US trade deficit swells to 54 billion dollars

WASHINGTON (AFP) - The US trade deficit boomed to 54 billion dollars in August, the second biggest in history, as the country was swamped by high-priced oil and Chinese-made goods.
The total gap grew 6.9 percent from July to a seasonally adjusted 54.0 billion dollars in August -- one billion dollars short of the record posted two months earlier, the Commerce Department said.
The scale of the deterioration surprised analysts, who had expected a deficit of about 51.5 billion dollars.
The report appeared to give ammunition to Democratic challenger John Kerry, who charged in a final televised debate Wednesday that President George W. Bush had failed to create a fair playing field for American exporters.
The election is November 2.
"The US trade deficit is above 50 billion dollars for the third month in a row," said CDC Ixis economist Rene Defossez.
"Oil is one explanation of this poor performance: since last June, oil prices are on a rapid upward trend. The growth gap between the US and its main trading partners is another explanation."
Imports rose solidly, gaining 2.5 percent to 150.7 billion dollars, but US exports were flat, edging up just 0.1 percent to 96.0 billion dollars, the Commerce Department said.
A breakdown of the raw, unadjusted, data showed:
-- The shortfall with members of the Organization of Petroleum Exporting Countries (OPEC) surged 17.4 percent to a record 7.0 billion dollars.
-- With China, the US deficit rose 3.3 percent to a record 15.4 billion dollars.
-- With Canada, the trade deficit expanded 12.7 percent to 6.6 billion dollars.
-- In trade with Japan, the US shortfall was flat at 6.4 billion dollars.
-- The gap with the 25-nation European Union shrank 9.2 percent to 9.6 billion dollars.
Overall, the American petroleum deficit widened 11.7 percent to a record 14.1 billion in August.
Crude oil imports gained 10.3 percent to 331.2 million barrels as the average price of a barrel soared 9.3 percent to a 23-year record 36.37 dollars a barrel.
"Oil is sucking an awful lot of income out of the economy, that is for certain, and there is also a troubling slowdown in our export activity," said Joel Naroff, president of Naroff Economic Advisors.
"You put the two of those together and you have got some additional uncertainties as far as the economy goes."
Flat US exports could be an early sign that the high world oil prices were crimping foreign economic activity, especially in Europe, he said.
"The higher oil prices I am sure are kicking them in the head just as much as they are doing here. It has got to be a real worry in Europe. This may be an indication that it is becoming an issue."
The huge US deficit with China, meanwhile, appeared set to carry on widening, Naroff said.
"China is shipping everything they possibly can here and the reality is that their markets are not open enough, broad enough or deep enough to buy enough from us," he said.
"That is just a reality that ultimately will have to be dealt with. It is a political issue as much as a trade issue."