Pray for wisdom of President

Nation's Trade Deficit Widened in May
By JEREMY W. PETERS, Published: July 12, 2006

The nation’s trade deficit widened slightly in May, largely because of record high prices for imported oil, the government reported today. The Census Bureau, which compiles trade statistics, said that the United States imported $182.5 billion worth of goods and services in May but exported only $118.7 billion worth, leaving a gap of $63.8 billion, about $500 million bigger than the previous month. Though not quite as large as many economists had forecast, the deficit was 13 percent larger than the $56.6 billion recorded in May 2005. When energy prices are removed from the calculation, the numbers suggest the trade imbalance is leveling off. Imports of crude oil jumped by 17 percent in value, or $2.8 billion, in May 2006, causing the overall import numbers to rise considerably. Without such high energy prices, May’s record export numbers would have had more of an impact on the overall trade deficit number. “When you strip out petroleum, you find the balance did actually improve,” Simon Hayley, senior international economist with Capital Economics said. American exports of industrial materials like metals and plastics rose, as well as exports of civilian aircraft. The Census Bureau report also showed that the American trade deficit with China, an increasingly sensitive political issue, grew by 4 percent in May, reaching $17.7 billion. China has increasingly one-sided trade with the rest of the world as well: on Monday it reported a surplus of $14.5 billion for June, its largest on record. Economists have warned that for both nations, such large imbalances are unsustainable. “We’re both dancing on the Titanic here,” Ethan Harris, chief United States economist for Lehman Brothers, said today. “Still, it took a long time for the Titanic to sink.” Economists see no immediate prospect that American dependence on imports — particularly oil — will ease or that the trade deficit will narrow substantially. “Any hopes for a quick solution will remain hopes rather than near-term realities,” said Jack Caffrey, an equity strategist with J.P. Morgan. “It’s going to probably take a combination of slower U.S. growth, higher U.S. savings, faster international growth and a weaker U.S. currency for this to get better.”

nytimes . com / 2006 / 07 / 12 / business / 12cnd-trade . html?ex=115336800...

Bush Steps Up Effort to Focus on Strength of Economy
By SHERYL GAY STOLBERG, Published: July 12, 2006

MILWAUKEE, July 11 — Blessed with a growing economy but facing voters who do not give him much credit for it, President Bush is intensifying efforts to persuade the public that things are looking up, with the aim of giving Republicans a boost in the midterm elections....“Today is a good day for the American taxpayer,” Mr. Bush said at the White House before flying here. The president was announcing that this year’s budget deficit would be $296 billion, as opposed to the earlier estimate of $423 billion. “Tax relief is working, the economy is growing, revenues are up, the deficits are down,” Mr. Bush said, “and all across this great land, Americans are realizing their dreams and building better futures for their families.” But some economists say that the picture is not all that rosy and that this is one reason Mr. Bush is not getting the customary bump in the polls from what his advisers call “robust economic growth and job creation.” High gasoline prices, rising interest rates and unease over the war in Iraq are mostly to blame. “High-income households, wealthier households, are doing fabulously well, but lower-middle-income households are struggling,” said Mark Zandi, the chief economist for Economy.com, a nonpartisan, independent subsidiary of Moody’s, the credit rating agency. “It really is a tale of two households, and I think President Bush is not going to gain traction on the economy as long as there is this wide disparity.” Mr. Bush and his aides say the president’s tax cuts have spurred economic growth, resulting in increased federal revenue, which has led to the drop in the deficit. “People are personally pleased with their economic position but are anxious about the future,” said Dan Bartlett, counselor to the president, calling the shoe factory visit “a real-life example that our economy is growing and prospering.” The factory, Allen-Edmonds, specializes in high-quality men’s dress shoes, including some owned by Mr. Bush. By visiting, the president sought to draw attention to a company that has resisted industrywide pressure to move its operations overseas. The company president, John Stollenwerk, gave Mr. Bush a pair of red, white and blue wingtip shoes, which the president promptly put on. Mr. Bush said Allen-Edmonds had benefited from his tax cuts, calling it “an American-based company making good American products.” Later, the president attended a fund-raiser for Representative Mark Green, the Republican candidate for governor in Wisconsin, where he called for his tax cuts to be made permanent. The president ticked off a litany of challenges his administration had faced: recession, corporate scandal, natural disaster and the war on terror. “And yet,” Mr. Bush said, “this economy of ours is strong and we intend to keep it that way.” By standard measurements, the economy does look good: a 4.6 percent unemployment rate, 5.4 million new jobs since August 2003 and a gross domestic product that grew an average of 4 percent in the past three years....In addition to Mr. Bush’s appearances, other administration officials, including Rob Portman, director of the Office of Management and Budget, and Al Hubbard, director of the National Economic Council, were also giving interviews and making public appearances. “Obviously, it’s frustrating to us that the American people don’t recognize how well the economy is doing,” Mr. Hubbard said. Congressional Republicans were quick to pick up on Mr. Bush’s theme on Tuesday, but fiscal conservatives, an important part of the Republican base, were strongly critical of federal spending....

nytimes . com / 2006 / 07 / 12 / washington / 12bush . html