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Wholesale Prices Up, Trade Deficit Soars

Aug 13, 9:15 AM (ET)

By MARTIN CRUTSINGER

WASHINGTON (AP) - Wholesale prices edged up just 0.1 percent in July as a big drop in food costs offset the biggest increase in energy prices in six months while the nation's trade deficit soared to an all-time high in June.

The Commerce Department reported Friday that the trade deficit surged to a $55.82 billion in June, a sharp 19.1 percent increase from a May imbalance of $46.88 billion.

The June deficit was har higher than economists had been expecting. It reflected a rise in imports, pushed up by surging energy costs and a drop in U.S. exports.

The small increase in the Labor Department's Producer Price Index last month, released separately by the Bureau of Labor Statistics, followed a 0.3 percent decline in June as price pressures at the wholesale level have shown a sharp moderation over the past two months following sizable increases earlier this year.

The small July increase reflected a 1.6 percent decline in food costs, the biggest one-month drop in more than two years, reflecting cheaper costs for beef and dairy products. Food costs had also fallen in June after three months of big increases.

The price moderation last month did not extend to energy, which shot up by 2.3 percent in July, the largest gain since a 4.7 percent rise in January. Energy costs had fallen by 1.6 percent in June. Last month's sharp turnaround reflected higher gasoline costs, which rose by 5.4 percent in July after having posted a 5.2 percent decline in June.

With crude oil prices hitting record levels this week, spiking above the $45 per barrel mark, analysts are predicting that the prices paid by consumers for gasoline and other energy products will be headed higher in coming months.

Democratic presidential nominee Sen. John Kerry has raised the soaring price of energy as a campaign issue, one part of his economic indictment against President Bush.

In remarks prepared for delivery Friday at a campaign stop in Eugene, Ore., Kerry said, "When we have gas prices going through the roof, the Americans I've met don't think we've turned the corner."

The Bush administration counters that the president has an energy plan designed to lower America's dependence on foreign oil but it has been blocked in Congress by Democrats who do not want to expand oil drilling in Alaska.

The surge in energy costs this year has acted as a major drag on growth by forcing consumers to spend more on filling up their gas tanks than on other products. The overall economy, as measured by the gross domestic product, slowed to a growth rate of just 3 percent in the April-June quarter, far below the 4.5 percent pace in the first three months of the year.

In an effort to make sure that inflation does not become a problem, the Federal Reserve raised a key short term interest rate by a quarter point on Tuesday, its second rate increase this year.

Fed officials signaled that further rate increases would occur at a "measured" pace which economists have read as an indication that the Fed will make quarter point moves at its final three meetings of the year in September, November and December.

Federal Reserve Chairman Alan Greenspan told Congress last month that the "soft patch" the economy encountered in the early summer should be short-lived.

However, private economists are worried that the continued rise in energy costs, which act like a tax on consumers, will further depress consumer spending in the months ahead and could jeopardize the economic recovery.

The trade report showed that imports rose by 3.3 percent to $148.64 billion in June, an increase that was led by a huge jump in the nation's foreign energy bill, which rose to $15.22 billion in June compared to $13.74 billion in May.

U.S. exports fell by 4.3 percent in June to $92.82 billion, the lowest level in four months, reflecting broadbased weakness across a number of categories of manufactured goods.

America's trade deficits with its major trading partners rose in June. The deficit with China jumped to $14.2 billion, the highest in history, while the deficit with Japan rose to $6.27 billion and the deficit with European countries using the euro currency rose to $7.85 billion. The deficit with Canada rose to $6.63 billion and the trade gap with Mexico widened to $4.9 billion.

The Kerry campaign contends that Bush's free trade efforts have led to huge trade deficits and cost millions of American manufacturing jobs as more companies move production overseas to low-wage countries.

#1 marketing tactic:

Make people feel inadequate and helpless .

. . .then introduce your solution.


Hey, I wonder if that approach would work to sell a Pesident? hmmmm ..:rolleyes:

AHHHHHHHHHHHHHHHHHHHH!!!.....the sky is falling!

I'll never forget when Bush stole office and was talking about the Clinton recession...The chorus of DemocRATs were harping incessantly about "Bush is talking down the economy."

For the last 3+ years the Democrats have been blocking all attempts at breathing life into a faltering economy (because they don't want the economy to do good under a Republican) and they have been doing nothing but talking down the economy.

Tax cuts stimulate the economy...bottom line.

what the. . ." the amount of Republican spin "?

Take another look at this thread. The volume of spin is clearly coming from democrats.

RUN FUR THE HILLS. THE BOTTOM IS ABOUT TO DROP OUT!!!!!!!!!!
http://www.pelicanparts.com/support/smileys/behead.gif http://www.pelicanparts.com/support/smileys/explode.gif http://www.pelicanparts.com/support/smileys/cut.gif http://www.pelicanparts.com/support/smileys/pyth.gif

Lassie . . .go get help . . .go get Super-kerry.

can someone please explain to me how a huge deficit combined with record consumer debt combined with huge trade deficit combined with record energy prices can be "healthy"?

I totally serious. No pithy comments or cartoons pasted from somewhere. Please tell me what is healthy about this scenario? And I'm not saying Kerry can fix it...just please tell me how it is the economy is currently healthy.

And this out late yesterday:

<b>"Retail Sales Rebound, Jobless Claims Fall"</b>

http://news.yahoo.com/news?tmpl=story&u=/ap/20040813/ap_on_bi_go_ec_fi/economy_24

Poor oppressed and uneducated YankmeABCs. The only thing he has to hold on to is the lie about the tax cuts. Somebody send him a purple heart.

We don't look like Russia. . .something like that could have happened.

ROTFLMAO!

Republican control of the administrative, legislative and judicial isn't enough!

The recent LA Weekly headline says it all: "sore winners."

not enough coffee this morning? context?

"the number of laid-off workers filing new claims for unemployment benefits fell by 4,000 last week to 333,000,"

So, 4000-fewer people got laid off last week than the week before; and we're supposed to break out the champagne?

Repugnicans. Unsuccessful in victory and unsuccessful in defeat.

What a sad story.

You wonder what force must be working against them to so consistently thwart their plans...

Could it be...

Oh, I don't know...


SATAN?

http://forums.pelicanparts.com/uploa...1092417569.jpg

Better than in the other direction.....no?

A nice glass of Cab would be fine for me, thanks :D

Uncharacteristically grounded there...

Scenario has been healthy in a similar way that the California real estate market has been healthy - or the lead up to the bursting of the tech bubble was healthy.

You can nay say and doom predict all you want - you just get laughed at so long as the scenario sustains itself. And it will - there's always a "greater fool" next door who will borrow more to buy your tech stock/california real estate/new car at a greater price than you - no worries.

But an end has to come. It's not rocket science that real property values (or growth in any other economic measure) cannot increase sustainably at a rate greater than growth in real income. Real income is that pesky thing called GDP.

Like musical chairs - just don't be left standing when the music stops.

And it will stop.

Soon.

Trust me.

:D and I thought I could skip coffee this morn.

Anyway, I'm just say'n; our finacial situation could have gotten bad faster, and to a worse degree.

I agree. The economic news isn't all bad, but it's not the 'raging recovery' some here are trying to portray (fint, you listening?).

It's a weird mix of exceptionally high consumer confidence, uneven purchasing patterns, high consumer indebtedness rate, job growth way below projections, etc.

The $150 (taxable) we got in the Summer of '01 didn't reverse the economic slowdown that started November '00. But that wasn't a recession. 9/11 triggered the recession and we should have been out of it now, if the collective wisdom of the Fed and GWBs cadre had had the key.

:D :D :D

Who said this first? It's so funny.:)

Hey Island:

You make an excellent point concerning making people feel helpless.

What about all the terrorist warnings without any active role for the public to take? Seems as it that has the same effect, to cause fear and unease.

I believe in alerting the public. I believe in not divulging sources. But, I also believe the people should be given a POSITIVE role to play, similar to Air Raid Wardens and Home Guard of a bygone era.

You mean calling in to conservative (is there any other kind) AM talk shows and screaming about illegal immigration and limitations on profiling isn't POSITIVE?

I must have stepped through a looking glass.

After Bush wins (no dig intended ) I believe you and I will be posting some common opinions and criticisms of Bush.

I (and surely others) have been defending Bush, not because he is perfect, but rather because Kerry is so so bad.

As I've posted before, I voted against Bush last time around (may again) but there is no way Kerry should get anyones vote! Seriously, Kerry has nothing to offer, save his tight relationship with the North Vietnamise.

People complain about Bush's image . . He has some weaknesses there. However,.clearly Kerry is even worse on managing his image. . . . it smacks of effort and fabrication.

Bush, otoh, is called stupid for his speach problem, BUT, his actions are not misunderstood, or disrespected by the world.

So it's a trade, on the point of image. I, personally, hold 'actions' higher than 'fabrications'.

I know precisely what to do...Watch out for suspicious camel jockies...Is it so hard to understand Money?

Does this mean I'll get a nice cost of living raise next year???;)

Whoa. That's about as rational a post as I have seen from you in a long, time Island. I have not been wild about the last two dem candidates. I wonder, in a country of some 300 million souls, why we cannot seem to round up a couple hundred LEADERS to send to Washington.

I recently worked for a fairly large organization and watched several changes in the corner office on the top floor. Most were mediocre, one was very good and one was very bad. The good one improved the performance of the organization a bit, enough, but not enormously. The bad one did more damage than three great ones could overcome. In fact, the bad one has been gone now for nearly a decade, and the organization is still trying to recover from the "reorganization."

And there are other similarities too. This guy was ambitious and haughty. His decisions were reckless and quick, like before someone could explain the complexities of the impacts. And it was all about him, and his career plans. Sound familiar? Oh, that's right, part of our audience thinks Kerry volunteered to get shot at for personal gain. How did you guys make it through college?

If you take individual statistics and use those as indicators, the economy can be made to look good or bad.
5.5% unemployment -good
4-5% growth - good
$400 billion defecit - bad
Lower than expected job creation - bad.

I am wondering how high the debt will have to get before the govt (dems and the gop) will stop borrowing. It's a fact that tax cuts stimulate economic activity, but w/o spending cuts, there can be no reduction of US debt.

So there needs to be some real bipartisan agreements - tax cuts to grow the economy, and spending cuts to not just balance the budget, but reduce the debt. (BTW, the debt did grow under Clinton. Even though the defecit was low, the national debt is not solely tied to defecit spending.)

I'm pretty bent about Bush spending like a drunken sailor to give senior citizens Rx drugs. I was happy about the tax cuts, but pissed about the ridiculous spending.

In fact, it's all about the spending. Congressmen and Senators get into power and control over $2 trillion/yr. They spend it like it's never going to run out. It's sick really. When the Dems had control over the money for 40 yrs, they spent like there was an unlimited supply. Then the GoP got in and spent even more! wtf? Who's left? Perot?

Congress sucks.

Yeah, what Thom says - Bush's actions are definitely disrespected by the world, and the only way this can be positive for him is if he, and his actions, are being misunderstood...

Tax cuts might stimulate the economy, but not by enough to get back the tax revenue lost. Government spending also stimulates the economy... especially military. Think about it.

You guys are going to keep running to deficit hell because no-one is brave enough to take the short term pain of spending cuts and/or higher taxes (with attendant crappy growth). You've had a great run for years, but I reckon the house of cards is getting a little fragile.

Maybe it will hold though :)

I wonder how effective your genius policing plan would have been at stopping the OKC, olympics and abortion clinic bombings?

disliked, by some nations, I could buy. . . but disrespected .. .by the world!?

Are you sure you're not overstating a bit there?

I would probably say not so much disrespected as feared and not really trusted. In order to have trust, one's policies must be both consistent and rational; not just consistent. To invade a country without a formal declaration of war makes other nations nervous, no matter how lofty the goal(s). Note I am not saying that Iraq was right or wrong.

The US has done some great things in the past, and liberated many countries including most of Europe and Asia in WWII. We have permitted independence to former colonies, making them independent nations. Even in the Middle East, we have a stated goal of someday getting out and letting them govern themselves. No colonialism. We have had failures, as well. Due to the "domino principle", we got involved in a civil war in Vietnam. That was a bad situation, and we lost. We lost more than a war, we lost face. We also lost a generation.

However, our recent actions have been misunderstood in large sections of the world, particularly those parts which are "non western" in nature. They see us as imperialistic, forcing our will unto sovereign nations. That makes us mistrusted. Even among "westernized" nations, there is some degree of mistrust for whatever reason. Some bring up the "oil for food" problem as being what separate us from France, Germany and Russia. There must be more than that.

I have trouble when I see the VP and his wife mocking the idea of sensitivity as part of our international policy. I seriously doubt that they do not understand what is the principle, but are just using it to their own ends and deliberately distorting what has been sorely lacking in our national policy. Sensitivity to the beliefs of other cultures is a vital step in coming to any kind of agreement. There have been posts here even mocking native americans as savages. We can't even treat each other with sensitivity. It is also wrong for the president to misstate what his opponent said about the Iraq war. To authorize it is one thing, if the authorization can be used as a tool to force conformance to UN sanctions. It is an entirely different thing to actually invade when (admittedly weak) the UN says "wait".

Kerry is not without fault. He has made some equally strange statements. And, I find the choice between the two is difficult. But the direction of the economy and the international unrest tell me that there is a chance we will be a lot worse off in 2008 than we are right now if policies are not changed.

I don't personally know anyone who approves of Bush's choices in Iraq ;)

I guess I'm overstating it a little - he has pockets of support, but they are in the minority. My part of the world generally sees US actions as aggressive self-interest (like you see French actions).

I will not, in any way, belittle those countries that are in the coalition. However, break down the numbers by percent of total for boots on the ground by country and it becomes clear that a coalition of 30 nations can be a mighty small coalition!!

When it comes to nations participating in any multilateral action, SIZE COUNTS!!

Many of those countries providing support (now, as distinct from in the invasion ---> we support the rebuild but didn't support the invasion) are doing so against the wishes of their populace. so "Coalition" is stretching the truth even further.

DOOM!!!! GLOOOMMM!!! THE END IS NEAR!!!!!




lol that was hilarious...yeah i dont know who im goin to vote for....they sent my cousin off to the mediterrean on the george washington for 6 months..

I dont approve of the whole iraq thing cuse to me it looks like another vietnam...we arent going anywhere despite what the media and the military says cuse everyone lies at one point. Bush needs to keep his nose out of other ppls business..what did iraq do to us? harbor al qaida? as far as i know, all the bastards that got caught was all in pakistan and over there...i could be missing a news story or two.

but because of all my decisions, america and its people are safer from terrorism...is what hes sayin....can you repeat it some more pleez?

You, and your entire generation of Americans just don't get it as clearly reflected by the entirety of this patronizing, distorted, selfagrandizing, pathetic piece of drivel.

"liberated many countries..." give me a break Horatio. "permitted indepence to former colonies..." I wont even begin to touch that one.

The really sad thing about America is that it is a multicultural wonderland lead by a buncha 50 to 60 year-old white men that would see nothing wrong with the altruistic pap partly quoted here. An even sadder thing is that the rest of the population, that should be dominant in the evolution of the nation into the 21st century is so disenfranchised by a meaningless and irrelevant (to them) two-party political system that they cant even be bothered to vote.

Some day, some way America will catch up with the cultural evolution (characterized by tolerance more than anything else) that's typical of the rest of the civilized world.

If not for buzzwords, your post would be one short sentence.

"just don't get it"
"pathetic piece of drivel"
"multicultural wonderland"
"50 to 60 year-old white men"
"altruistic pap"
"disenfranchised"

You forgot "and the horse you rode in on"

Your post looks like a cut and paste job from ihateamerica.com

And who is it you suggest we emulate. What country should we model ourselves after? France? Japan? Rwanda?

Is the civilized world really evolving into some sort of tolerant paradise? Are you actully suggesting that there is a society in the world today that is more tolerant than America?

The reason the "rest of the population" is "disenfranchised" is because their ideas don't work.

I see this fairly often and I want to comment:

"disliked, by some nations, I could buy. . . but disrespected .. .by the world!?"

I think Island may have been pointing out that, whether you like Dubya's style or not, his Big Gun (the most powerful military force in the world, hands down) and his obviously very itchy trigger finger has GOT to be getting him some respect.

I see this a lot. Island was trying to correct someone who suggested that the world does not respect Dubya. I think he failed. I don't think this gets respect. Fear, yes. Respect, no.

But you guys who think the ROCKY-RAMBO-HARRY CALLAHAN-TERMINATOR style of "leadership" is cool.....well.......you and the rest of the 8 year-olds just keep right on cheering Dubya. While the rest of the world shakes its head in disgust.