U.S. Trade Deficit Deepens; Oil Imports Cited
The U.S. trade deficit surged 11% to $6.99 billion in January largely because of increased oil imports, the Commerce Department reported Wednesday.
Analysts said the higher oil bill masked a healthy 3.6% rise in exports, which has helped offset the continuing weakness in the rest of the American economy.
Exports rose during the month to $34.49 billion, and imports increased to $41.49 billion.
The cost of imported oil accounted for much of the growth in the dollar value of imports. Oil imports rose to $3.91 billion in the month, up from $3.61 billion in December. The increase in America’s bill for imported oil came as a result of a 21% rise in the amount of oil imported, more than offsetting a sharp $2.72 drop in the average price of a barrel of crude oil from December.
Meanwhile, January’s export total was the second-highest for any month on record, surpassed only by last October’s $35.01 billion, the Commerce Department said.
Despite the trade gap’s increase, it was still smaller than the $7.5 billion that analysts had expected, largely because of the strong showing by exports. In fact, the deficit was below the average monthly deficit of $8.4 billion in 1990, and the January level represented a 19.8% improvement over the average monthly deficit for the fourth quarter of last year, the Commerce Department said.
The Bush Administration seized on the figures to show that the trade deficit--long a political sore point in America’s relations with Japan and Europe--is easing.
“Vigorous export performance in January provided a boost to the overall economic activity of the nation,” Commerce Secretary Robert A. Mosbacher said.
“U.S. manufacturers are clearly aggressively seeking out markets overseas for their goods,” Mosbacher added.
Economists noted that U.S. exports probably will continue to increase throughout 1991, despite the recent rise in the value of the dollar against other currencies, which tends to make U.S. products more expensive overseas.
Last year’s plunge in the dollar’s value will continue to help American exporters this year, despite the recent increase, noted Roger Brinner, a senior economist with DRI-McGraw Hill, an economic forecasting firm in Lexington, Mass. Brinner said that in dollar terms, average hourly wages of U.S. workers are far below those of workers in most other major industrial nations. As of December, for example, the average U.S. worker made $15 per hour, while the figure for German workers was $23 per hour, when their pay was converted into dollar terms.
“The dollar’s strength will nibble away at the competitive advantage of the U.S., but we still have an advantage in labor costs,” Brinner said. “There is still plenty of room for American firms to offer low prices, thanks to low costs, and still make handsome profits.”
Merchandise Trade Deficit Increased oil imports lifted the nation’s trade deficit by 11% in January, but economistssaid strong export sales during the month were encouraging. Billions of dollars, seasonally adjusted: import figures excludes shippingand insurance. Jan. ‘90: 10.20 Dec. ‘90: 6.28 Jan. ‘91: 6.99 Source: U.S. Dept. of Commerce
