Exports soar behind a falling dollar
WASHINGTON – A falling dollar boosted U.S. exports to record highs, pushing the trade deficit to its lowest level in 28 months.
The trade gap with China, however, worsened as retailers brushed aside worries about a string of high-profile recalls to stock their shelves with Chinese imports for holiday shoppers.
The Commerce Department reported Friday that the trade deficit dipped 0.6 percent in September to $56.5 billion, the smallest imbalance since May 2005.
The improvement came from a 1.1 percent jump in U.S. exports, which climbed to a record $140.1 billion. The dollar’s decline against many major currencies has made U.S. goods cheaper and more competitive in foreign markets. American producers are also benefiting from stronger growth overseas.
While the weaker dollar boosts exports, it also raises worries on Wall Street about whether foreign investors may at some point start dumping their dollar holdings because of the declines. The dollar’s decrease to a record low this week against the euro helped to trigger a 361-point drop in the Dow Jones industrial average Wednesday.
Treasury Secretary Henry Paulson said Friday that he was not worried that the U.S. dollar might at some point lose its position as the currency of choice for investors.
“The dollar has been the world’s reserve currency since World War II and there is a reason. We are the biggest economy in the world. We are as open as any economy to investment,” Paulson told reporters at Treasury.
The trade report showed that imports were also up in September, climbing by 0.6 percent to $196.6 billion, the second highest level on record. Oil imports fell, however, by 0.8 percent to $10.5 billion, an improvement that is likely to be temporary given the recent surge in oil prices to close to $100 per barrel.
The deficit with China rose to the second highest level on record, up 5.5 percent to $23.8 billion, reflecting big gains in shipments of Chinese-made televisions, cell phones, computers and toys as retailers stocked their shelves for Christmas.
Those increases were occurring despite a rash of recalls of Chinese products this year of everything from toys with lead paint to defective tires and chemical-tainted toothpaste and pet food ingredients.