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Fallout: The Financial Crisis

Why the trade deficit is growing

Marketplace Staff Aug 12, 2009
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Fallout: The Financial Crisis

Why the trade deficit is growing

Marketplace Staff Aug 12, 2009
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TEXT OF STORY

Bill Radke:
The government just reported the U.S. trade deficit widened in June. It was up 4 percent to $27 billion. What’s really new here is, the cost of what we import went up for the first time in almost a year. Marketplace’s Alisa Roth tells us why.


Alisa Roth: One thing is responsible for the growing trade deficit. And it probably sounds pretty familiar.
Jay Bryson is an economist at Wells Fargo.

Jay Bryson: What it reflects is just the higher oil prices that we saw between May and June.

Though the prices are still a lot lower than they were a few years ago. When oil prices are high, we have to spend a lot more money to import it. Overall though, the trade deficit’s actually been getting much smaller over the last few years. And Bryson says the recession has made it even smaller.

Bryson: We’ve seen a collapse in imports. That reflects just the very weak US economy. When people aren’t spending as much as they did before, that spills over to imports.

So we’re not buying as much as we were from other countries. But they’re still buying stuff from us, things like airplanes. And raw materials. And that’s helped keep the economy going, albeit slowly.

I’m Alisa Roth for Marketplace.

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