MercoPress. South Atlantic News Agency

Record crude prices swell US trade deficit in July

Rising oil prices swelled the United States trade deficit in July to its widest level since March 2007, according to the latest government figures. The trade deficit widened to 62.2 billion US dollars from an upwardly revised estimate of 58.84 billion in June.

With crude prices soaring in July oil imports also increased by about 15% in the month - taking the petroleum deficit to a record 43.3 billion. Excluding petroleum products the US trade deficit shrank to its lowest level since October 2002. Oil prices are currently around the 100 US dollars a barrel mark after surging as high as 147 US dollars in July. A barrel of crude on the New York Mercantile Exchange cost an average 117 US dollars in August compared to 133.77 in July. Meanwhile, US exports got a boost from the weakening of the dollar as it made US goods more attractive to other countries. As a result July exports of goods and services rose 3.3% to a record 168.1 billion. Import climbed 3.9% to 230.3 billion US dollars including the oil bill. In August, prices of goods imported into the US fell by the most in almost two decades of record-keeping as the cost of oil and natural gas dropped, indicating slower economic growth may be starting to calm inflation, according to another report. The import-price index decreased 3.7% more than forecast, after rising a revised 0.2% in July, the Labor Department said. Outside of oil, costs fell 0.3% following a 0.7% increase the prior month. The sensitive trade gap with China widened to 24.9 billion from 21.4 billion US dollars in the prior month, while with OPEC it jumped 34% to a record 24.2 billion. In related news the Congressional Budget Office, CBO, said the US budget deficit is expected to reach a record 438 billion US dollars in 2009. It also warned the deficit could go higher as the figure does not take into account possible government costs for taking over Fannie Mae and Freddie Mac. The CBO added the US government will run a deficit of 407 billion this year. During the next fiscal year - starting on 1 October - a "turbulent" economy would cut revenues, the CBO warned. "The significant expansion in the deficit is the result of a substantial increase in spending and a halt in revenue growth," the CBO report said. In 2008, the CBO estimates, federal spending will be 8.3% higher than it was in 2007; at the same time, total revenues will be less than they were in 2007.