U.S. Trade Gap Hits Record in January
Faltering computer exports and higher prices for imported oil helped create a big upward spike in the U.S. trade deficit in January to $28 billion, yet another record, the Commerce Department reported Tuesday.
Representing the difference between what the nation buys and sells abroad, the number has risen almost every month since 1997. Usually the increases come a billion or so dollars at a time. In January, however, the deficit rose $3.4 billion over December’s figure.
That was the net effect of a $1.5-billion falloff in exports, largely in capital goods such as computer chips and other electrical goods.
Commerce Department economists suggest that decline in U.S. exports may be in part due to foreign trading partners holding off from U.S. computer purchases due to millennium bug concerns and those numbers spilling over into January.
The $1.9-billion rise in imports includes a higher imported oil bill of $700 million and another $700 million spent on foreign cars and car parts.
The goods deficit with Japan decreased from $7 billion in December to $5.6 billion in January, the department reported. That did not reflect increased exports to Japan, however. Those exports declined, mostly reflecting lower sales of computers and related products. But imports from Japan declined faster, resulting in a net drop in the country-to-country deficit.
The goods deficit with China continued to rise, however, reaching $6 billion from December’s $5.6 billion figure.
America’s deficit with Canada, its biggest trading partner, hit a record $4.29 billion, up 24.4% from December. The deficit with Mexico, the other partner in the North American Free Trade Agreement, more than doubled in January to $1.77 billion.
America’s deficit with the 15-nation European Union shrank by nearly 1% to $3.86 billion.
Many economists say that the current deficit levels can’t be sustained indefinitely. Over time, the huge deficits will contribute to a lowering of the value of the U.S. dollar on world financial markets.
That would tend to decrease the deficit by making foreign goods more expensive to Americans and American goods cheaper to foreigners.
