US trade deficit jumps to record levels in September

US trade deficit jumps to record levels in September

WASHINGTON - The US trade deficit hit record levels in September and was recorded at $66.1 billion. This figure is almost $7 billion more than what was recorded in the previous month and has surpassed even the bleakest of expectations.

The trade scenario was not helped by the ever-increasing imports, which jumped by 2.4 percent to $171.3 billion. A drop in exports of2.6 percent to $105.2 billion also added to the worries. US imports are now 63 percent more than the corresponding exports. What this means is that if the deficit is to be controlled, the exports need to rise 63 percent faster than the imports. This scenario is highly unlikely and this has analysts worried.

"The trend over time is likely to remain for a wider trade gap generally," said Ian Morris, US economist at HSBC in New York.

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Trade in the country was hit badly by the soaring oil prices in the aftermath of the devastation caused by Hurricane Katrina and the strike at Boeing. The fear that the hundreds of billions of dollars held by foreign countries most notably China could be encashed is growing by the day, as is US indebtedness.

Kristin J. Forbes, a former member of President Bush's Council of Economic Advisers said that one month's deficit could not result in such a scenario, "But this shows that the deficit is increasing instead of decreasing. It raises concern that we need to start seeing adjustment in the global trade imbalances soon," Forbes added. China's trade surplus is adding to the worries in the manufacturing as well as political sectors.

"The Chinese have failed to act on their promise to revalue their currency. Every day this administration waits, we give an artificial trade advantage to the Chinese," said Rep. Benjamin L. Cardin (D-Md.), ranking minority member of the trade subcommittee of the House Ways and Means Committee. President Bush is expected to take up this issue with the Chinese President Hu Jintao later this month.