U.S. Trade Prices Rise; Current Account Deficit Deepens

By John S. McClenahen For the fifth time in the past six months, the price of capital equipment, food, petroleum and other goods that the U.S. imports rose in August. The U.S. Import Price Index rose 0.3% last month, reports the U.S. Labor Department's Bureau of Labor Statistics. The August figure is slightly less than July's 0.4% gain but a dramatic contrast to a 0.3% decline in June. August's increase again was led primarily by higher petroleum prices. Prices for petroleum imports last month rose 2.1% while prices for non-petroleum goods increased only 0.1%. Prices for goods that the U.S. exports also increased in August, up 0.1%. A continued rise in prices of agricultural exports -- they were up 1.9% -- was the major factor. In contrast, prices for capital goods, consumer goods and cars were either unchanged last month or just slightly higher. Meanwhile, the U.S. Commerce Department's Bureau of Economic Analysis reports that the U.S. current-account deficit deepened to a record $130 billion during the second calendar quarter of this year. The deficit was $112.5 billion during the first three months of this year. More inclusive than the merchandise trade balance-it includes trade in services and net international income -- the U.S. current-account balance has significantly deepened since 1998.

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