US June trade deficit biggest since 2008 at $53.1 bn - The Economic Times
Posted On Thursday, August 11, 2011 at at 7:32 PM by PradeepThe deficit rose 4.4 percent to $53.1 billion in June, the largest imbalance since October 2008, the Commerce Department reported Thursday. Imports fell 0.8 percent to $223.9 billion as crude oil prices fell for the first time in nine months. Exports dropped 2.3 percent to $170.9 billion, the biggest decline in more than two years.
The drop in exports, the second in a row, was a blow to hopes that rising overseas demand will boost the fortunes of American manufacturers in the face of a slump in spending by US consumers. The concern now is that a global slowdown will hobble a US economy that is in danger of stalling out.
The deficit through June is running at an annual rate of $576.6 billion, 15.3 percent higher than the 2010 imbalance. A higher trade deficit subtracts from overall economic growth because it means consumers are purchasing more foreign-made goods and fewer products made by US workers.
The big rise in June's deficit came as a surprise to economists who had been forecasting an improved deficit based on their belief that oil prices would fall, lowering imports, while exports would recover from a May decline which had been the first setback after 10 monthly gains.
Instead, exports tumbled by the largest amount since a 5.1 percent plunge in January 2009 as the global economy was in the grips of a deep recession.
The weak June trade report was the latest in a string of disappointing economic statistics raising concerns that the US economy could be in danger of toppling into another recession. The economy slowed to an annual rate of just 0.8 percent in the first six months of the year, the slowest period of growth since the recession officially ended two years ago. In June, consumers cut spending for the first time in 20 months and saved more while wages were barely growing and unemployment remained above 9 percent.
The deficit with China shot up by 6.8 percent $26.7 billion in June, the highest since September 2010. The deficit with the European Union rose 12.2 percent to $9.8 billion, the worst imbalance since July 2008. The deficit with Japan climbed 53 percent to $4 billion. Imports with Japan had been reduced in previous months following the March natural disasters which disrupted production at Japanese auto plants and other factories. As Japanese factories have resumed more normal operations, shipments to the United States have been rebounding.
Oil imports fell 4.3 percent in June to $38.2 billion as the average price of a barrel of crude oil fell to $106, down from $108.70 in May. It marked the first decline in crude prices in nine months.
U.S. stocks follow global stocks lower - USATODAY.com
Posted On Monday, August 8, 2011 at at 7:54 AM by PradeepWorries about the downgrade of U.S. debt and a possible recession in the USA outweighed relief at aEuropean Central Bank pledge to buy up Italian and Spanish bonds to help those countries avoid defaults.
A key concern is how much the U.S. debt downgrade will contribute to global uncertainty, causing investors to sell stocks and hang onto their cash, hobbling the global economic recovery.
European markets lost early momentum and most were trading sharply lower ahead of the opening of U.S. markets, when traders will have their first chance to respond to Standard & Poor's decision to lower its triple A rating for the U.S.
MORE: How bad will the global economy get?
MORE: Does U.S. face another recession?
MORE: World stocks today
Investors remain worried about the state of the world economy and policymakers' ability to deal with the European debt crisis, said Neil MacKinnon, global macro strategist at VTB Capital.
Stock prices fall after U.S. credit downgrade - latimes.com
Posted On at at 7:53 AM by PradeepThe Dow Jones industrial average quickly fell more than 200 points after the markets opened Monday morning, but then quickly made up some of the losses on the first day of trading after the United States lost its AAA credit rating with Standard & Poor's.
Investors had been nervously awaiting Monday's market opening after Standard & Poor's made its announcement Friday night. Overnight, leading stock indexes in Europe and Asia fell more than 2%.
Over the weekend, Dow futures contracts were trading down nearly 250 points. The New York Stock Exchange invoked rules that allow for smoother trading when heavy activity is anticipated.
The Dow quickly fell 245 points after the opening bell but more recently was trading down 219.79 points, or 1.9%, at 11,224.82.
The Standard & Poor's decision was not expected to force any technical changes in how the markets operate, particularly given that the other two major credit ratings agencies have maintained the U.S. at the top grade. But the move has rattled investors who are already nervous about recent economic data pointing to an economic slowdown.
Markets have fallen nearly every day for the last two weeks and are now below where they began the year.
Just before the markets opened, Vincent Farrell, the chief investment officer at Ticonderoga Securities wrote to clients: "What I hope is for the market to fall significantly on the open, stabilize, run up, fall down, and run up again at the end of the day. The only part of that I have any confidence in is the fall on the open part."
With the United States' credit risk being judged lower by Standard & Poor's, Treasury bonds might have been expected to lose some of their luster. However, investors still appear to be using Treasuries as a haven amid global economic turmoil. The yield on the 10-year Treasury bond was down 1.1% on Monday morning, indicating that there was heavy demand for the bonds.
Gold, another haven, also saw its value rise nearly 3.1% on Monday morning.
Beyond the U.S. credit rating, investors are concerned about the longer-term prospects of the U.S. and European economies. On Sunday, the European Central Bank announced that it will initiate a program to buy the bonds of member countries in an effort to prop up the European economy.