Trade Deficit Widens, Import Prices Rise, Consumer Confidence Falls

- The Trade Deficit for June widened to -$58.8B versus estimates of -$57.2B and -$55.4B in May.
- The Import Price Index for July rose 1.1% versus estimates of a .6% increase and a 1.0% gain in June.
- The Preliminary Univ. of Mich. Consumer Confidence for August fell to 92.7 versus estimates of 96.3 and a reading of 96.5 in July.

BOTTOM LINE: The US trade deficit widened more than forecast in June as a strengthening US economy prompted companies to import more expensive crude oil and a record amount of goods from China, Bloomberg reported. I continue to believe the trade deficit will only improve modestly by year-end.

Prices of goods imported into the US rose in July by the most in four months, pulled up by record crude oil costs. Excluding oil, import prices fell for a third straight month, Bloomberg reported. Import prices should subside further as oil declines in the fourth quarter.

US consumer confidence fell in August from the highest level of the year as Americans confronted record gasoline prices, Bloomberg said. I expect consumer confidence to begin rebounding in September and hit cycle highs by year-end as economic growth exceeds 4%, inflation decelerates, gas prices fall, interest rates remain relatively low and stock prices rise.