U.S. Trade Deficit Widened
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U.S. trade deficit unexpectedly widened in May for the second month as imports exceeded exports, the government said Tuesday. The gap in goods and services rose 4.8 percent to 42.3 billion dollars from 40.3 billion dollars in April, the Ministry of Commerce said in a report, as quoted from the AFP. Most economists expect the deficit fell to 39.4 billion dollars.
Imports rose 2.9 percent to the highest 18-bulansebanyak 194.5 billion dollars while exports rose 2.4 percent to the highest 19-month to 152.3 billion dollars i.e. Recent data indicates that the trade could blunt the economic growth in the United States despite the increase in imports in the world’s biggest economy offers hope for global economic recovery, analysts said.
That “trade show will be a bigger drag on growth in the second quarter than we first anticipated,” said Aaron Smith, a senior economist from Moody `s Economy.com.
The U.S. economy grew by 2.7 percent in the first quarter of 2010 but analysts expect slowing expansion this year amid high unemployment caused by the worst recession in decades. While the widening of the deficit is “negative” for the U.S. gross domestic product, “it is a net positive for global growth,” said analyst Kimberly DuBord of Briefing.com. The increase is driven by U.S. imports of consumer goods, motor vehicles, spare parts and machinery and capital goods.
The new data also shows that the political sensitive trade deficit with China widened 22.3 billion dollars in May from 19.3 billion dollars in April, a development that could trigger calls for the acceleration of China’s Yuan currency appreciation. Three weeks after China’s central bank pledged to loosen currency controls in the midst of international pressure, the U.S. Treasury Department said last week Yuan remain “undervalued” against the dollar. Beijing accuses the United States has maintained its currency to remain low against the greenback to trade advantage.
“To maintain the cheap China-made products on the shelves of U.S. stores and prevent U.S. exports to China, Beijing undervalues Yuan by 40 percent,” said Peter Morici, a business professor at the University of Maryland.