Hello, I'm Mark Pearson. Since consumer spending accounts for nearly 75 percent all domestic economic activity, analysts monitor sales figures closely. This week, a key government report revealed U.S. consumers spent a bit more freely in June.
According to the Commerce Department, U.S. retail sales rose 0.1 percent last month... A modest gain to be sure, but the improvement came in the wake of a DECLINE in May, which broke a string of 10 consecutive monthly gains.
Auto sales surged 0.8 percent driven, in part, by falling gasoline prices. Nevertheless, consumers are currently paying nearly a dollar more per gallon than they did a year ago.
Seperately, the government reported America's cavernous trade deficit swelled in May to its highest monthly level in more than two and a half years. America's trade deficit with Japan fell more than 25 percent as the island nation continued its recovery from the March earthquake and tsunami. But the politically sensitive trade deficit with China soared to $25 billion... its largest gap since November.
The Obama administration has been pressuring China to allow its currency to rise at a faster rate against the dollar. This week, however, the White House was more concerned with getting Congress to approve a hike in America's $14.5 trillion dollar debt ceiling. But the administration also is urging Congress to pass several languishing trade agreements.
The Obama administration is pressing Congress to ratify three pending trade agreement with Korea, Panama and Columbia. At issue is the inclusion of a “trade adjustment assistance” provision that would provide job training to Americans who could lose their jobs due to increased imports.
Republicans and Democrats are split over the issue. A “mock markup” from the Senate Finance Committee, which is controlled by democrats, included TAA but the House Ways and Means Committee, controlled by republicans, objectes to the inclusion of the trade adjustment assistance in the Korean package.
The Labor Department estimates approximately $500 million in TAA grants will be given out this year and over $2 billion will be awarded over the next four years.
In his January 2011 State of the Union address, President Obama urged congress to pass a trade agreement with Korea that would support American jobs.
President Obama; “To help businesses sell more products abroad, we set a goal of doubling our exports by 2014 -- because the more we export, the more jobs we create here at home. Already, our exports are up. Recently, we signed agreements with India and China that will support more than 250,000 jobs here in the United States. And last month, we finalized a trade agreement with South Korea that will support at least 70,000 American jobs. This agreement has unprecedented support from business and labor, Democrats and Republicans -- and I ask this Congress to pass it as soon as possible.”
While the president believes the trade agreement with Korea would save or create American jobs, studies by the Economic Policy Institute, a Washington D.C. nonpartisan think tank, indicate the agreement would cost at least 159,000 jobs and increase the trade deficit with Korea by about $16.7 billion.
Agriculture continues to be a bright spot in an otherwise gloomy trade picture. U.S. ag exports soared to a record $155.8 billion in 2010. All told, agriculture enjoyed a $33.9 billion trade surplus, a sharp contrast to the $668 billion deficit in nonagricultural trade.
Last year, exports of agricultural products to Korea alone totaled $5.3 billion making the Asian nation the 5th largest U.S. Ag export market. U.S. imports of agricultural products from Korea totaled $298 million in 2010.
Under the accord first negotiated in 2006, Korea would drop tariffs altogether on 60 percent of US farm exports to the country, while tariffs on beef and pork would fall to zero over 15 years.
U.S. Secretary of Agriculture Tom Vilsack is pushing for congress to act quickly, cautioning that Australia – another major beef producer – is negotiating its own FTA with Korea and any delay could allow Australian beef producers to establish a toe hold in Korea. According to Vilsack the free trade agreement would expand agricultural exports to Korea by $1.8 billion.