May was a tough month for the national deficit.
For the first time since October 2008, monthly trade deficit surpassed $50 billion.
In fact, it had risen to $50.2 billion, 15% higher than the April deficit of $43.6 billion, and significantly higher than the projected $44.0 billion estimated by Wall Street analysts.
A large portion of this was due to oil imports and their respective prices.
Price-per-barrel of oil was the highest in May since August 2008, averaging at $108.70 a barrel, a significant increase from April’s $103.18.
Overall, oil imports had increased 9.0% for the month of May, contributing heavily to the deficit increase.
Other industries that contributed to the increase included the automobile industry. Auto imports increased 4.9%, and industrial equipment imports rose 2.6%.
Total imports rose 2.6% while exports dropped 0.5%.
Despite the drop in exports, however, they were still at one of the highest rates ever. April 2011 set a record high for U.S. exports.
This has followed a plan set in motion by President Obama in January 2010, a plan which aims to double the U.S. exports in 5 years.
In 2010, exports rose 16.7%, and in the first months of 2011 they jumped again by 16.3%.
The problem arises in widening gaps with major trade partners.
The deficit in trade with Canada rose to $2.7 billion in May, and deficit with China shot up 16% to $25 billion.
The U.S. government has been concerned about trade with China, believing that the Chinese government is manipulating the yuan to keep it undervalued in relation to the dollar.
The Obama administration is urging the Chinese government to allow appreciation of the yuan.
Overall, exports in May were worth $174.9 billion, while imports were worth $225.1 billion.
Oil prices have been decreasing from May’s high prices, and so this could help ease the national deficit as the summer continues.
That’s all for now,