The markets spent the day digesting a raft of economic news that showed a widening trade deficit, a stubbornly high rate of unemployment and a higher price of goods for U.S. businesses at the producer level.
On Thursday, the Commerce Department reported that the August trade deficit widened further compared to July, with the deficit with China accounting for $28 billion, up from $25.9 billion a month earlier.
"The overall improvement in the U.S. trade deficit through the 'Great Recession' and especially in 2009 is rapidly becoming a thing of the past as a steady widening since May 2009 has now pushed the nominal trade deficit out wider than it was in November 2008," wrote Pittsburgh-based PNC Financial Services' economics group in an analyst note.
Stocks were lower in afternoon trading, with the Dow Jones industrial average down 49.27 points, 0.44% lower, at 11,046.81. The S&P 500 was down 8.75 points, 0.74% lower, at 1,169.35. The Nasdaq index was down 14.13 points, 0.58% lower, at 2,427.10.
Imbalance in Trade With China Worsens
Notably, the July to August increase in imports of goods reflected an overall $1.4 billion increase in consumer goods, much of it from China. U.S. exports of consumer goods were virtually unchanged. In addition, the United States increased its consumption of crude oil to a rate of $20.21 billion in August from $19.95 billion in July.
"U.S. international trade data in 2010 shows a widening headline trade gap driven by a growing imbalance in trade with China," the PNC economists wrote. "On a non-seasonally adjusted basis the trade in goods with China ran a further
$2.1 billion into deficit in August, showing a bigger drag to net trade coming from China than from any other country or major trading block, including OPEC and the European Union."
Total August exports of $153.9 billion and imports of $200.2 billion resulted in a goods and services deficit of $46.3 billion, 8.8% higher than July's revised figure of $42.6 billion. August exports were $0.3 billion greater than July exports of $153.5 billion, while August imports were $4.1 billion greater than July imports of $196.1 billion.
