U.S. trade deficit grows
The U.S. trade deficit took a turn for the worse in February as imports swelled to meet American consumers’ renewed appetite for electronics, toys, apparel and other goods from abroad.
The larger-than-expected $39.7-billion deficit was up from a revised $37 billion in January, according to figures released Tuesday by the Commerce Department.
U.S. imports climbed 1.7% to $182.9 billion in February. American purchases of foreign-made consumer goods were particularly strong, jumping 3.1% from January to $38.1 billion. Imports of petroleum and computers also posted significant gains.
American exports of goods and services also rose in February, to $143.2 billion from $142.9 billion the month before. Increases were seen in American-produced cars and capital goods such as engines and semiconductors.
Some economists viewed the latest report as evidence that economies around the world are strengthening. But as global trading activity resumes after the sharp fall during the recession, American economists and political leaders are concerned about a return to a familiar pattern of soaring trade deficits, which drags down overall economic growth and domestic employment.
President Obama has pledged to build a new foundation for the American economy, one centered more on savings and domestic production and exports, and less on borrowing and consumption from foreign sources. The president has set a target of doubling U.S. exports within five years.
So far, it would seem Obama is on his way toward that lofty goal. Taking January and February together, U.S. exports of goods and services were up 14.8% from year-earlier levels, to $286.1 billion.
But American imports, year over year, rose 16% in the first two months, to a combined $362.7 billion.
“The trick here is to reduce the trade deficit . . . and that’s just not happening,” said Peter Morici, a University of Maryland professor and former chief economist at the U.S. International Trade Commission. “I expect the deficit to get worse, because the economy is recovering moderately and imports are growing faster than exports.”
If that pattern continues, Morici and other economists warn that more good domestic jobs will be lost. Although rising imports can boost employment at ports, warehouses and trucking firms, deficits can supplant domestic production, leading to excess capacity and job cuts at factories that trickle down to suppliers and other service businesses.
The American economy has lost more than 5 million manufacturing jobs in the last decade, and it has recovered 45,000 of them in the last three months.
Of particular concern is the worsening trade picture in advanced technology goods. In the first two months of this year, the U.S. exported $41.1 billion worth of technology goods but imported $48.2 billion of such products. The resulting $7.1-billion deficit -- mainly in information and communications products -- was more than double the shortfall in January and February of 2009.
The Obama administration is trying to support American exporters by helping them with financing and marketing, among other initiatives. But some lawmakers, economists and manufacturers argue that China’s undervalued currency remains a major barrier to American competitiveness.
Tuesday’s report showed that the U.S. trade deficit with China narrowed 9.8% in February from a year earlier to $16.5 billion. Analysts speculated that the decline might take some of the pressure off Beijing to let its currency rise in value against the dollar. A stronger yuan would tend to make China-produced goods more expensive in the U.S., while giving Chinese consumers more buying power to splurge on imports.
Obama administration officials said the president brought up China’s currency and other economic issues Monday with his Chinese counterpart, Hu Jintao. But there was no announcement on any forthcoming changes.
If Beijing allows the yuan to appreciate, U.S. exports may get a further boost as other economies in Asia would probably follow suit and let their currencies rise against the dollar, said Jock O’Connell, international trade advisor at Beacon Economics, a California forecasting firm.
“We are only now getting back to the level of exporting we were at three years ago, before the global financial and economic crisis sent international trade spiraling downward,” O’Connell said, referring to California’s exports trade, which jumped 13.7% in February from a year earlier.
The state shipped $10.4 billion in goods that month in a fourth consecutive month of year-over-year increases.
Times staff writer Alana Semuels in Los Angeles contributed to this report.
