Trade Deficit Hits Record High

The U.S.’ trade deficit with the rest of the world hit a fresh high of $69.9 billion in August, partly because of lofty oil prices that since have eased.

The August trade gap was well above expectations and followed a previous record deficit of $68 billion in July. Both imports and exports were at record levels in August -- a sign of fairly vigorous economic activity -- but persistent deficits will probably shave third-quarter growth sharply.

In addition, record deficits on trade with China keep a weak U.S. trade position on the front burner and could make it an issue in campaigning for November congressional elections. The August deficit with China was $22 billion.

“We are not only shipping jobs overseas, we are shipping billions of dollars overseas,” said Rep. Marcy Kaptur (D-Ohio), a critic of Bush administration policies calling for free-trade pacts. “We are exporting our jobs and our wealth, not our products.”

In fact, exports grew in August by 2.3% to $122.4 billion but import growth was a slightly stronger 2.4% to $192.3 billion.

“It is a pretty bad figure,” said economist David Sloan of 4Cast Ltd. in New York.

“We now expect to see a pretty weak third-quarter GDP [gross domestic product] figure, significantly below 2%.” That would fall below the second quarter’s modest 2.6% annual rate of GDP growth.

A trade deficit, which indicates a country imports more than it exports, subtracts from measures of domestic product, whereas a surplus adds to the nation’s output.

The first reading of third-quarter GDP performance is scheduled to be issued Oct. 27, less than two weeks before Nov. 7 congressional voting.

A survey released Thursday from manufacturing executives pointed to some slackening in the pace of expansion during September and forecast further slowing in the fourth quarter.

The Manufacturers Alliance/MAPI index of future business activity fell to 64 in September from 71 in June, its lowest level since June 2003.

Anything over 50 indicates growth.

The Labor Department said new applications for unemployment benefits inched up 4,000 to 308,000 last week -- not enough to be troubling in the view of analysts who said they did not see any widespread trimming of payrolls.