Imports Hit Record, Send Trade Shortfall Soaring 21%

Record imports sent the January U.S. trade deficit spiraling to the widest monthly gap in more than nine years, the Commerce Department said Thursday, likely putting a drag on the economy’s first-quarter growth.

The January shortfall between exports and imports of goods and services shot up 21.1% to $12.71 billion after a revised 31.6% jump in December. Commerce said the trade gap was the widest since the fourth quarter of 1987, when deficits were running at an average $12.9 billion a month.

The U.S.-China trade deficit for the month widened to $3.723 billion, the largest monthly deficit since October 1996, as imports of apparel, footwear and electronic toys continued at a brisk pace. This follows a December deficit of $2.645 billion and compares with a $2.744 billion gap in January 1996.

The widening U.S.-China trade gap will give critics of China’s closed-market policies more ammunition in this year’s annual debate over renewing China’s most-favored-nation trade status in June.

President Clinton is expected to renew the country’s trade privileges--which allow Chinese imports to enter the U.S. at the same low tariffs that apply to nearly all other countries--although not without a fight from Congress.

Some key U.S. lawmakers, lead by House Minority Leader Richard Gephardt (D-Mo.), introduced legislation Thursday that would require a congressional vote prior to the U.S. supporting China’s entry into the World Trade Organization.

Meantime, the U.S. posted a $4.294 billion trade deficit with Japan in January, up 0.7% from a month earlier and 13.3% above the $3.791 billion in January 1996.

In January, a strong U.S. economy drew imports to meet vibrant consumer demand while struggling Europe and Japan offered a less-buoyant market for American-made goods. Costly imported oil and an appreciating dollar that priced up U.S. goods for foreigners also helped tip the balance.

“It’s going to get worse, not better,” predicted economist Sung Won Sohn of Norwest Corp. in Minneapolis. “Trade will be a drag on the economy.”

Sohn said relatively strong consumer spending likely will keep the U.S. economy growing at around a 3% rate in the current first quarter, but that will be down from 3.9% in the final quarter of 1996.

Other reports Thursday underlined the durability of the long-running economic recovery, still generating jobs and wealth in its seventh year of growth since the recession of 1990-91.

The Labor Department said that new claims for jobless pay edged up by only a modest 3,000 last week to 312,000.

In the trade report, Commerce said total imports of goods and services into the U.S. climbed 2.2% to a record $83.48 billion in January, a third consecutive monthly increase. Exports fell for a second month in a row, down 0.6% to $70.78 billion.

The cost of imported petroleum products rose to $5.11 billion from $4.66 billion in December.

In January the merchandise deficit increased 12.7% to $19.02 billion from $16.87 billion in December. The surplus on services narrowed 1.1% to $6.31 billion from $6.38 billion in December.

The Commerce Department said there were record imports of industrial supplies and materials, capital goods and cars and parts during January.

Meanwhile, exports of U.S.-produced commercial aircraft plummeted by $869 million to their lowest level in a year while foreign sales of U.S. telecommunications equipment and capital goods also dropped sharply.