Trade deficit widens to $49.9 billion in June

The U.S. trade deficit surged in June to the highest level since October 2008 and imports of foreign consumer goods hit an all-time high. But U.S. exports faltered, representing a setback for American manufacturers.

The deficit jumped 18.8 percent in June compared to May, widening to $49.9 billion, the Commerce Department reported Wednesday. The wider deficit came as a surprise to economists who had forecast a smaller trade gap because of lower global oil prices.

An economic recovery or liquidity phase of a consumption-driven economy with structural deficits (consumes more than it produces) is characterized by imports rising faster than exports. The import to export ratio (IM/EX), as expected, has been rising since the start of the liquidity injection phase in 2009. The 2009-2010 setup is similar to that of 1991-1997.

Imports to Exports Ratio (Census Basis):


Source: finance.yahoo.com