The U.S. trade deficit narrowed more than forecast in August as the falling dollar stimulated record foreign demand for American products from wheat to electric generators.
The $57.6 billion trade gap was the smallest since January, the Commerce Department said in Washington. The surge in exports may also be helping prop up the U.S. job market in the face of the housing slump: Unemployment-benefit claims last week dropped more than predicted, the Labor Department said.
The increase in shipments abroad means economic growth in the third quarter probably exceeded 3 percent, according to new estimates by Morgan Stanley and Bank of America Corp. That's faster than the 2.7 percent anticipated by economists surveyed by Bloomberg News. As recently as August, the forecast had been as low as 2.4 percent.
“It's a better balance than we expected to see, and that's going to lead many of us to revise up our forecasts,” said David Resler, chief U.S. economist at Nomura Securities International Inc. in New York. “The weaker dollar is one factor helping exports, but so too is the generally strong conditions overseas. They're pulling exports out of the U.S.”
Treasury securities slid after the reports before rebounding later in the day to end little changed. The yield on the benchmark 10-year note fell to 4.64 percent from 4.65 percent late yesterday. The Dow Jones Industrial Average dropped 63.57 points to close at 14,015.12.
While exports climbed, prices of imports rose 1 percent in September from the previous month, after a decline of 0.3 percent in August, according to a separate report from the Labor Department. The increase was due to oil costs, as other prices posted their biggest decline since October 2006, the Labor Department said today. The figures indicated little pressure on inflation even as the weaker dollar threatens to push up costs, Bloomberg reports.
As Pravda.Ru previously reported growing exports may help US economy avoid coming recession and collapse.
The housing recession and tighter credit conditions may even accelerate that trend: As U.S. demand slows, so will imports. At the same time, solid growth overseas and a new downturn in the dollar will continue to power U.S. exports, and that will boost U.S. manufacturers' revenues and profits. In fact, this may well mark the beginning of the long-awaited realignment of global growth that will rebalance trade and capital flows between the U.S. and the rest of the world.
Speaking on global trade imbalances, Federal Reserve Chairman Ben S. Bernanke said in Berlin on Sept. 11 that he saw signs of progress but noted that the process will be slow.
"Most countries have only just begun to undertake the policy changes that will be ultimately needed," he said. More progress is necessary in both private and government saving in the U.S., in combination with structural economic reforms in many areas outside the U.S.
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