Oil prices push US trade deficit higher
Gap of $63.8b in May sets stage for largest yearly imbalance ever
WASHINGTON -- A record jump in the price of imported oil pushed the trade deficit to $63.8 billion in May, offsetting robust overseas sales gains by American companies.
The price of foreign oil jumped by the largest amount since the runup to the first US-Iraq war in 1990, and America's trade imbalance rose 0.8 percent from a revised April deficit of $63.3 billion, the sixth-largest ever, the Commerce Department said yesterday.
``Oil is sucking us dry, and even stronger world growth cannot keep the trade deficit from widening," said Joel Naroff, chief economist at Naroff Economic Advisors.
The trade deficit is running at an annual rate of $763 billion, 6.5 percent higher than last year's record of $716.7 billion. President Bush's critics blame the growing deficit on unfair trade practices in China and elsewhere, contributing to the loss of nearly 3 million manufacturing jobs since Bush took office.
The increase in the May deficit reflected a 16.9 percent surge in the foreign oil bill. It totaled $27.9 billion, $4 billion more than in April.
The increase reflected a big jump in the average price of imported crude oil, to $61.74 a barrel. That was $4.92 higher than the month before. Also, it was the biggest one-month increase since oil rose $6.06 a barrel from August to September in 1990 after Iraq's invasion of Kuwait.
Economists are predicting the trade deficit will worsen, reflecting additional increases in world oil prices. They reached a record last week, above $75 a barrel.
The US gap with China rose by 4 percent to $17.7 billion, reflecting big gains in imports of cell phones, clothing and textiles, and writing and art supplies.