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Trade Deficit Widens—a Good Sign?
Container ship loading at Copenhagen
Credit:  Wikimedia Commons

The U.S. trade deficit widened in June, the Commerce Department reported last week.

But some economists saw some good news in the larger deficit, which had narrowed in recent months as the volume of trade between the United States and the rest of the world dwindled. The value of imports rose in June for the first time in nearly a year, and American exports increased from a month earlier, though not as much as imports.

The $35-billion increase in imports primarily reflected rising costs of crude oil, fuel oils and other petroleum-based goods, but businesses and consumers in the United States were also buying more food and beverages from abroad, and demand for foreign-made cars rose.

“Growth in the rest of the world is picking up, and that’s critical if we are to emerge from the worst recession since the Great Depression,” Joseph Brusielas of Moody’s Economy.com told The New York Times.

In July, the number of overseas manufacturers sending shipments to the United States increased by 7 percent, according to Panjiva, a firm which tracks shipping. Still, the number of shipments from overseas was down 10 percent from last July.

Overall, the trade deficit widened to $27 billion in June, from $26 billion in May, according to the Commerce Department. The United States imported a total of $152.8 billion in goods and services, and sent $125.8 billion to the rest of the world.

Economists had expected the trade gap to widen to $28.5 billion for the month.

The figures suggested the worst was over for the global economy, economists said, and that demand for American-made goods was picking up. The United States sent more capital goods like civilian aircraft, semiconductors and industrial machines to other countries, and also exported more industrial supplies.

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