The government unleashed a batch of upbeat economic reports this week, though trade and budget deficits keep analysts cautious in their long-term outlooks.
Here's the good news: *third-quarter economic growth was a healthy 4.3 percent, the best showing in a year ... *personal spending edged up in October, thanks to increased consumer confidence and lower energy prices ... *and new homes sold at a record pace last month.
*That news helped lift the Dow Jones average near the 11,000 mark, a level not seen in four-and-a-half years.
On the flip side is the soaring trade deficit, which was pushed by high oil prices to a monthly record of $66 billion in September. Even the once sizable but shrinking U.S. farm trade surplus no longer can be counted on to ease America's trade problems.
Farm trade will be at the center of a meeting this month in Hong Kong among the members of the World Trade Organization. It's a critical meeting. Success or failure in Hong Kong will set the tone for international trade matters for years to come. And on the verge of those talks, prospects are not good.
The EU is not alone in receiving pressure from developing countries unhappy with the current global trade situation. Last month, the Bush administration offered to cut farm subsidies by 60 percent, but the proposal didn't satisfy countries that included Brazil, India and Mexico. Developing nations say they are suffering from unfair competition as a result of U.S. subsidies totaling $9.3 billion and EU subsidies worth $4.2 billion a year. The U.S. has said it would be willing to make more concessions in agriculture if they are matched by others. The EU remains rigid with its farm trade offer.
Because of the standstill, key members of the 148-nation WTO worry that a trade deal next month is unlikely. Many had hoped the December WTO talks would help create the framework for a global trade treaty by the end of 2006. On Monday, Malaysia's trade minister urged WTO countries to temporarily set aside the troublesome issue of agricultural trade and to move ahead with opening up global trade in other sectors. Next week's meeting was supposed to be the concluding session of the so-called Doha Round, which was started in 2001 and meant to address the concerns of poor nations in global trade. WTO members hope these global trade talks won't end in deadlock like they did in Cancun a few years ago.
The Hong Kong WTO ministerial meeting is scheduled December 13th through the 18th.