U.S. trade deficit widens.  The Bureau of Economic Analysis (BEA) reported that the trade deficit widened by $5.7 billion in September to $36.5 billion.  This was largely due to a  $9.1 billion increase in imported goods (imports and exports of services were little changed).  The rise in imports suggests that consumer demand has increased or will increase in the near future.  Imports of industrial supplies increased by $5.5 billion, including a $4.0 billion increase in crude oil.  Imports of automotive vehicles and parts also rose by $1.7 billion.  While exports rose for the fifth consecutive month, the 4 percent increase in exported goods (an increase of $3.5 billion) was dwarfed by the increase in imported goods.  September’s increase in exports reflected an increase in capital goods ($1.7 billion increase) and industrial supplies ($1.4 billion increase).  In addition, import prices have been rising faster than export prices, according to the Bureau of Labor Statistics (BLS).  Import prices have risen in 7 of the past 8 months, although import prices are still down by 5.7 percent compared to October 2008.  Export prices have also increased recently, although they were 3.4 percent lower than in October 2008.   As the dollar weakens, export prices should fall and import prices should rise, making U.S. exports more attractive to other countries and causing the trade deficit to narrow.  As a result, a sustained decline in the dollar should improve the U.S. trade deficit.  While the dollar has depreciated over 17 percent  against the euro in the last year, the trade deficit decline (40 percent since September 2008 — See Chart) reflects weak demand for imported goods because of the recession rather than a surge in exports.

Retail sales rise.  The U.S. Census Bureau reported that October retail sales were up 1.4 percent from September 2009, but down 1.7 percent from October 2008.  Excluding motor vehicles and parts, retail sales were up 0.2 percent from September.  Motor vehicle and parts dealers reported a 7.4 percent increase in sales in October, after a 14.3 percent decline in September, evidence that pent-up demand for automobiles was not satisfied during July and August, when the “cash for clunkers” program was in effect.

Consumer sentiment falls.  The University of Michigan reported that its Consumer Sentiment Index fell by 4.6 points to a three-month low of 66.0, below what experts had expected.  This is the fourth decline in the last five months.  The decline in consumer sentiment partly reflects concerns about the strength of the labor market.  Consumer spending accounts for more than two-thirds of the gross domestic product (GDP) and falling consumer sentiment may indicate reluctance among consumers to increase spending.

President Obama plans a forum to discuss job creation.  The White House has announced that President Obama plans to hold a White House forum on job creation next month.  Attendees will include small business owners, corporate executives, economists, financial experts, and union leaders.  They will meet to discuss ways to create jobs within the context of the current budget situation. Despite GDP growth of 3.5 percent in the 3^rd quarter, the economy shed 190,000 jobs in October.  On November 6, President Obama signed legislation extending unemployment benefits up to 20 weeks.