- The Washington Times - Tuesday, January 13, 2009


Wall Street slipped Tuesday despite a government report showing that the nation’s trade deficit between October and November plummeted to its lowest level since November 2003.

In late afternoon trading and during a seesaw session, the Dow Jones Industrial Average dropped 56.79, or 0.67 percent, to 8417.18. The tech-heavy Nasdaq dipped 2.61, or 0.17 percent, to 1536.18. The broader Standard & Poor’s 500 sagged 4.33, or 0.50 percent, to 865.93.

Much of the reason for the drop in the deficit to $40.4 billion in November was because of far lower demand for oil and a severe cutback in imports from China. But U.S. exports to China and elsewhere, chiefly farm products and heavy machinery, also registered big declines.

At the same time, the chairman of the Federal Reserve Board, Ben Bernanke, warned in a speech in London that President-elect Barack Obama’s expected $800 billion plan to stimulate the economy may not be enough even though it would provide a “significant boost to economic activity.”

The Commerce Department reported that the trade deficit registered a 28.7 percent decline from the $56.7 billion deficit in October, which the Associated Press reported was a bigger decrease than economists had expected.

Further declines are expected in the months ahead because of the worsening recession as Americans saddled with debt, an unemployment rate of 6.7 percent, worries about their jobs and paying for mortgages worth more than their homes buy less and less.

Further, the price of a barrel of oil is continuing to decline — to below $38 Tuesday — after having hit a high of $147.27 in July. The price drop will help the trade deficit as well as being good news for motorists.

Through November, the trade deficit hit an annual rate of $688.2 billion, down from the $700.3 billion in 2007, the Commerce Department said.

On the export side, which has been a plus for the U.S. economy, the value of the goods and services shipped abroad dropped to $142.8 billion in November, down 5.9 percent from October.

It marked the lowest level of exports in 14 months, which could hurt the earnings of major U.S. exporters, further worsening job prospects.

But imports plunged 12 percent to $183.2 billion, their lowest point in 2 years. One reason: Imports of petroleum products dropped 36.5 percent to $23.6 billion.

Imports from China declined 17.5 percent to $23.1 billion in November as Americans bought less, as American retailers can attest as their sales continue to shrink in the midst of some of the biggest sales in decades.

Wall Street investors mostly appear to be worried about earnings reports, especially after aluminum giant Alcoa reported losses of $1.19 billion during the fourth quarter. Alcoa is a major exporter.

More of the same dispiriting news came from Japan with reports that the biggest name in Japanese electronics, Sony Corp., faces its first operating loss in 14 years because of declining sales of its high-tech wares. People everywhere just aren’t buying.

Weak corporate earnings are expected to be a feature of Wall Street for the next several months because of declining sales in everything from automobiles to electronics in the face of a yearlong recession in which unemployment has reached 7.2 percent and the average workweek has dropped to 33.3 hours.

More companies are expected to cut back on their number of workers, and some economists have forecast unemployment reaching into the double digits before a turnaround in the economy begins in the second half of the year.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide