Trade Deficit Hits Record $29.2 Billion in Feb.

A surging foreign oil bill along with Americans’ appetite for foreign computers and telecommunications equipment helped push the U.S. trade deficit to a monthly record of $29.2 billion in February.

That bigger-than-expected deficit was up by 6.5% from a January shortfall of $27.4 billion, the previous record, the Commerce Department said Wednesday.

Economists said the trade report isn’t as bad as it appears because it was driven so heavily by oil prices, which have since subsided.

“When you adjust for oil prices, the deficit narrowed,” said Northern Trust Co.’s chief economist, Paul Kasriel. Imports jumped by 1.5% in February to a record $113.4 billion as sales of crude petroleum, industrial supplies and capital goods such as computers and telecommunications equipment rose to records.

Through the first two months of this year, the U.S. trade deficit was running at an annual rate of $340 billion, compared with $268 billion for all of 1999.

“About half of the increase in the deficit thus far this year can be traced to higher petroleum prices,” said Commerce Secretary William Daley.

The price of crude oil hit $25.01 per barrel in February, the highest since December 1990 on the eve of the Persian Gulf War. Imports of foreign oil, meanwhile, hit an all-time monthly high of $6.5 billion in February.

Production limits by oil-producing nations pushed crude-oil prices to a nine-year high in early March of $34 a barrel, but prices have fallen since then. A decision by the Organization of Petroleum Exporting Countries to boost production should provide additional relief.

The U.S. deficit with OPEC countries widened to a record $3.2 billion in February, a 21.4% increase.

For the second straight month, U.S. exports dipped in February. They fell 0.2% to $84.2 billion. Sales of food such as fish, corn and fruits fell, as did sales of cars and capital goods, including airplanes and industrial machines.

The U.S. economy could face dangers at some point, economists warn, if the huge increases in the trade deficit continue and foreigners suddenly decide they no longer want to hold dollar-denominated assets. A sudden rush for the exits could send American stock prices and the value of the dollar plunging.