U.S. Trade Gap Closes 17.9% in February
A billion-dollar mistake by the Commerce Department in reporting the February trade deficit on Thursday temporarily obscured a significant decline in the monthly shortfall.
The Commerce Department announced late in the day that after correcting for “reporting errors” on oil imports, the February deficit actually dropped 17.9% to $10.4 billion, from $12.67 billion in January. Earlier, the department had announced that the monthly gap had narrowed by just 8.5% to $11.59 billion.
A booming U.S. economy still drew in hefty imports during February, but not at quite as fast a clip as the government had first estimated.
Several analysts said they could not recall seeing such a huge correction in the trade report on the day it was issued.
Economist Lawrence Chimerine of the Economic Strategy Institute in Washington said first-quarter economic growth may now be revised up since the import bill is not quite as high.
“Monthly numbers are erratic . . , but a billion dollars is not an insignificant amount,” Chimerine said of the error.
Exports rose 4% in February to a record $73.46 billion, helped by a bulge in commercial aircraft sales to Britain and by a modest fall in costs for imported oil and other types of energy.
After news reports said there may have been an error, the Commerce Department spent hours checking its figures. The department found that about $1.1 billion of oil imports that had entered the country had incorrectly been reported as having arrived in February and therefore had to be subtracted from its monthly estimate.
Although the change altered the overall monthly deficit, analysts said the correction does not change the basic fact that big gaps persist in trade with key Asian dynamos Japan and China.
Analysts added that it will be hard to shrink these import and export deficits at a time when a soaring U.S. dollar is making Japanese cars and other imported goods cheaper for American consumers.
The deficit with Japan--the biggest with any single country--was down 0.9% to $4.26 billion. The shortfall with China narrowed 9.6% from January to $3.37 billion, but exports to China actually were lower in February.
“We’re now facing a double-whammy. Every single month Japan and China are giving us a one-two punch, and in the future, it’s going to be China that is leading the assault,” said economist Sung Won Sohn of Norwest Corp. He noted that China has primarily been buying high-tech machinery from the U.S. with the intent to boost its manufactured exports further.
In a separate report, the Labor Department said new applications for jobless benefits picked up last week, to 332,000 from 324,000 the previous week.
