Oil imports drive record trade deficit
WASHINGTON — The trade deficit surged to a record in September as oil imports hit an all-time high, driven up by hurricane-related shutdowns of Gulf Coast production.
The deficit with China also hit a record as that country shipped a flood of televisions, toys and clothing to the United States, triggering demands that President Bush take a hard line on what Democrats in Congress called China’s unfair trading practices.
The Commerce Department reported Thursday that September’s trade deficit was a record $66.1 billion, 11.4 percent higher than August and much worse than economists had been forecasting.
Analysts blamed much of the rise on hurricanes Katrina and Rita, which shut down production at Gulf Coast refineries and pushed oil prices to record highs.
The trade deficit so far this year is running at a record annual rate of $706 billion, putting it on track to far surpass the old record of $617.6 billion set last year.
Critics say the deficit is the result of the Bush administration pushing free trade agreements that reduce the cost of products for U.S. consumers but send American jobs overseas, where labor costs are lower. The United States has lost 3 million manufacturing jobs since mid-2000.
In other economic news, the government reported that the number of Americans who have lost their jobs because of the hurricanes rose to 542,000 last week. Last week’s increase included 15,000 applications for jobless benefits related to Katrina and Rita and 6,000 attributed to Hurricane Wilma, which struck Florida in October.
On Wall Street, stocks rallied with the Dow Jones industrial average climbing 93.89 points to close at 10,640.10.
The increase in the trade deficit reflected the fact that imports jumped by 2.4 percent to a record $171.3 billion in September, driven by a $23.8 billion bill for oil imports as well as a big increase in imports of consumer goods.
U.S. exports fell by 2.6 percent to $105.2 billion in September, the biggest monthly decline in four years. However, analysts cautioned that the drop-off was heavily influenced by a strike at aircraft-maker Boeing, which sharply curtailed shipments of jetliners during the month.
The deficit with China jumped 8.9 percent to a record $20.1 billion and through September is running at an annual rate approaching $200 billion, far above last year’s record deficit of $162 billion. Democrats pointed to this as evidence the Bush administration has failed to bring enough pressure on China to stop engaging in unfair trade practices such as manipulating its currency to gain trade advantages.
Sen. Byron Dorgan, D-N.D., called the new deficit figure “devastating news.” He and 13 other Democratic senators wrote a letter to Bush urging him to use a visit to China next week to pressure the government to stop undervaluing its currency against the dollar and to crack down on the copyright piracy of American products.
Attorney General Alberto Gonzales said Thursday that he would travel to China next week as well to urge his Chinese counterparts to step up their efforts to halt piracy and counterfeiting through use of increased criminal enforcement.
The trade report showed that imports of clothing and textiles from China are up 50.4 percent through the first nine months of this year compared with the same period in 2004.
U.S. purchases of foreign oil rose by 4.4 percent in September, with the average price for a barrel of imported crude oil hitting an all-time high of $57.32, up from a $52.65 per barrel average in August.