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US Trade Deficit Grows

The US trade deficit (difference between imports and exports) has risen to $60 billion, the largest in history. Official figures for November showed that exports fell by 2.3%, while imports had grown at a rate of 1.3% during the same period.

Analysts have suggested that the figures can mainly be blamed on the higher prices of oil imports. One surprise for many, however, is that the weak US dollar does not seem to be boosting American exports. This undoubtedly seems to be worrying and seems to be an indication of a weak economic situation.

Looking at the specifics, it would seem that falling exports could be attributed to a number of sectors, most notably consumer items, foods, cars and chemicals.

Any sign of weakness in the US economy is traditionally followed closely by economists and governments globally. Indeed, as some would say, "if America sneezes then the rest of the world catches a cold". It's certainly often been the case that the UK stockmarket has often closely followed movements on Wall Street, while the dominance of the dollar on the currency markets has previously ensured that its movements have also been closely monitored.

US governments have frequently stated their desire to maintain a strong dollar but many have noted that the Bush administration have struggled to follow such a policy, with the dollar seeming in free-fall.