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US trade deficit narrows as American demand declines
By Timothy R. Homan |
March 14, 2009, Saturday
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Print Edition
Print Edition
The United States trade deficit narrowed in January to the lowest level in six years on tumbling American demand for everything from OPEC oil to Japanese automobiles.
Imports fell faster than exports, closing the gap by 9.7 percent to US$36 billion, the Commerce Department said yesterday in Washington. Excluding petroleum, the deficit was little changed at US$21.3 billion.
The credit crunch gripping the financial system is causing demand throughout the world to slump as consumers and businesses pull back. What's shaping up to be the biggest plunge in global trade in 80 years is adding to pressure on the Obama administration to rework international pacts and include protection for US workers and the environment.
"It's not a good report for US manufacturing," said Julia Coronado, a senior US economist at Barclays Capital Inc in New York, which forecast the deficit would narrow to US$35.5 billion. "This is certainly a sign that the global weakness is feeding into the domestic economy through the export channel."
The trade gap was projected to narrow to US$38 billion from December's US$39.9 billion, according to the median forecast in a Bloomberg News survey of 72 economists. Projections ranged from US$31 billion to US$44.5 billion.
The trade gap with China rose to US$20.6 billion from US$19.9 billion in the prior month as US exports to the nation dropped faster than imports.
The global economy is likely to shrink for the first time since World War II, and trade will decline by the most in 80 years, the World Bank said this week without providing a specific estimate.
The narrower gap is not good news for the US economy because it mainly reflected the drop in petroleum prices. The numbers used to calculate gross domestic product, which eliminate the influence of prices, showed the trade deficit widened to US$44 billion, the most since October.
Imports slumped 6.7 percent to US$160.9 billion, the fewest since March 2005, paced by a US$4.3-billion plunge in purchases of crude oil. Demand for foreign automobiles dropped by US$3.3 billion.
The gap with Japan shrank to the lowest level since January 1998, as US imports fell to an almost 16-year low.
Imports fell faster than exports, closing the gap by 9.7 percent to US$36 billion, the Commerce Department said yesterday in Washington. Excluding petroleum, the deficit was little changed at US$21.3 billion.
The credit crunch gripping the financial system is causing demand throughout the world to slump as consumers and businesses pull back. What's shaping up to be the biggest plunge in global trade in 80 years is adding to pressure on the Obama administration to rework international pacts and include protection for US workers and the environment.
"It's not a good report for US manufacturing," said Julia Coronado, a senior US economist at Barclays Capital Inc in New York, which forecast the deficit would narrow to US$35.5 billion. "This is certainly a sign that the global weakness is feeding into the domestic economy through the export channel."
The trade gap was projected to narrow to US$38 billion from December's US$39.9 billion, according to the median forecast in a Bloomberg News survey of 72 economists. Projections ranged from US$31 billion to US$44.5 billion.
The trade gap with China rose to US$20.6 billion from US$19.9 billion in the prior month as US exports to the nation dropped faster than imports.
The global economy is likely to shrink for the first time since World War II, and trade will decline by the most in 80 years, the World Bank said this week without providing a specific estimate.
The narrower gap is not good news for the US economy because it mainly reflected the drop in petroleum prices. The numbers used to calculate gross domestic product, which eliminate the influence of prices, showed the trade deficit widened to US$44 billion, the most since October.
Imports slumped 6.7 percent to US$160.9 billion, the fewest since March 2005, paced by a US$4.3-billion plunge in purchases of crude oil. Demand for foreign automobiles dropped by US$3.3 billion.
The gap with Japan shrank to the lowest level since January 1998, as US imports fell to an almost 16-year low.
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