- The Washington Times - Thursday, November 9, 2006

ASSOCIATED PRESS

The U.S. trade deficit improved in September after hitting an all-time high the month before, helped by lower oil prices. The imbalance with China, however, soared to a record as retailers stocked their shelves for Christmas.

The overall deficit declined 6.8 percent to $64.3 billion in September from a record $69 billion in August, the Commerce Department reported yesterday.

The drop of $4.7 billion was better than expected and represented the biggest one-month decrease in more than five years.

The improvement came from a 10.5 percent fall in America’s foreign oil bill, which dropped to $26.3 billion. The volume of imports fell, and crude oil prices declined sharply. Oil now costs about $60 per barrel after hitting $77 in the summer.

Analysts said the improvements should continue if oil prices do not spike again. But they cautioned against expecting any quick fix in a deficit still on track to set a record for the fifth straight year.

“There is little in this report to tell me that once we get past the petroleum effect, there are any basic changes in the trade situation,” said Joel Naroff, chief economist at Naroff Economic Advisors. “With the Congress changing hands, the political pressure on the administration to do something about China is likely to build.”

The deficit with China set a record of $23 billion in September. It is running at an annual rate of $228 billion this year, on pace to surpass last year’s $202 billion; that figure was an all-time high for any U.S. trading partner.

“Clearly, the U.S. needs a serious review of its trade policy. The ‘hands-off, anything goes’ trade policy employed by the Bush administration has not worked,” Rep. Sander M. Levin, Michigan Democrat, said yesterday.

Democratic Rep. Nancy Pelosi of California, expected to be the next speaker of the House, has been an outspoken critic of China’s human rights record; other Democrats are pushing legislation that would penalize China unless it allows its currency to rise in value against the dollar as a way of making U.S. products more competitive in China.

Commerce Secretary Carlos Gutierrez will lead a 25-company delegation to China next week in hopes of boosting U.S. exports.

“While China is more open than before, much progress must still be made to provide fair access to American exporters and businesses,” Mr. Gutierrez said.

U.S. Trade Representative Susan C. Schwab said the continued increase in exports, which have been rising for seven straight months, was good news.

U.S. exports, helped by a big jump in sales of commercial aircraft, rose by 0.5 percent to an all-time high of $123.16 billion in September. The large decline in oil helped push total imports down by 2.1 percent to $187.46 billion.

This year, the deficit is running at an annual rate of $781.6 billion, far above last year’s record of $716.7 billion.

In other economic news yesterday, the number of people in the U.S. filing claims for unemployment benefits fell by a better-than-expected 20,000 last week to 308,000, indicating that employers continue to resist widespread layoffs even as the economy slows.


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