Saturday, August 14, 2004

Living beyond means

Numbers speak for themselves, over & over again...

U.S. Trade Deficit Increased 19% in June: Analysts Worry That Burgeoning Gap Will Lead to Higher Interest Rates, Lower Dollar

...By the end of June, imports exceeded exports by $55.8 billion, another record U.S. trade deficit, the Commerce Department reported yesterday. The size of the gap forced many economists to trash their forecasts and pencil in lower estimates of the economy's strength in coming months.

..."The U.S. as a nation is just living way beyond its means," said Nigel Gault, U.S. economist for Global Insight, an conomic research firm, noting that household debt has soared in recent years and that the federal budget deficit is ballooning to a record size. "There is a worry that at some point, U.S. spending growth will have to slow sharply to get this under control."The size of the trade gap surprised many analysts because it showed the U.S. economy had slowed more significantly than thought in the spring.

...Several analysts said they also expect weaker U.S. economic growth in coming months as trade provides an additional drag on a recovery that may be faltering under the weight of high energy prices, stalling job creation and tepid consumer spending. "Unless there is significant improvement in coming months, the deficit's trajectory poses serious questions about the growth outlook in the second half," Joseph Abate, of Lehman Brothers Global Economics, wrote in a note to clients, calling the trade figures "shockingly dismal."...