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U.S. trade gap widens
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March 20, 2001: 1:22 p.m. ET
January deficit rose 0.2 percent to $33.3 billion, a shade above forecasts
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NEW YORK (CNNfn) - The U.S. trade deficit edged up to the second-highest level on record in January as imports of cars and oil products jumped, the government said Tuesday.
The deficit in merchandise trade rose 0.2 percent to $33.3 billion from a revised $33.2 billion in December, the Commerce Department reported. Wall Street had been expecting a gap of about $33 billion, according to Briefing.com, which tracks economists' forecasts.
The deficit with China rose sharply but the trade gap with Japan narrowed.
The merchandise trade deficit soared to a record $368.9 billion last year, up 39 percent from the prior record of $265 billion, set in 1999. The report showed America's trade problems spilling over into the new year.
The report comes as Federal Reserve policy makers meet Tuesday. The Fed is widely expected to cut interest rates for the third time this year in a bid to keep the United States from slipping into recession.
"It's a pretty negative development in terms of the outlook for growth in the U.S.," Bill Dudley, chief economist at Goldman Sachs told Reuters news service Tuesday. "This just reinforces the notion that monetary policy is going to need to be used quite aggressively" to boost the economy."
The dollar showed little reaction to the report, and stood a shade lower against both the Japanese yen and the euro in early trading.
The U.S. trade deficit has steadily widened as the booming economy drew in massive amounts of consumer goods and industrial products from around the world.
However, the swelling trade deficit raised no eyebrows since it occurred simultaneously with the nation's lowest unemployment levels in three decades.
Now that the economy has slowed sharply and unemployment is on the rise, concern about a possible recession is growing. Already the domestic steel industry is calling on the government to erect barriers to deflect a flood of imported steel.
The average price for a barrel of crude oil declined in January to the lowest level in 13 months, $23.13 per barrel, down from $26.53 in December.
U.S. exports of auto parts shrank by $500 million, and industrial supplies and materials declined $100 million, while exports of foods, feeds and beverages and other goods remained virtually unchanged.
Imports of consumer goods rose $1.3 billion; autos, parts and engines were up $200 million; industrial supplies and materials gained $200 million; and foods, feeds and beverages also rose $200 million, the government said.
Exports of services, such as business, professional, technical and financial services declined while imports of services remained flat.
The U.S. showed January surpluses with Australia, Argentina, Egypt, Hong Kong, and Brazil.
Asia accounted for the biggest deficit in January led by China at $7.2 billion, followed by Japan at $5.9 billion and Canada at $5.8 billion. Deficits also were recorded with Western Europe, OPEC, Mexico, Korea, Taiwan, and Singapore.
In its report, Commerce said its revisions for December included $795 million in export shipments to Mexico that were reassigned to January after a mistake was discovered.
The Bush administration has indicated it will make an effort this year to get Congress to grant it the negotiating authority it needs to strike new global trade agreements. Former President Clinton was unable to obtain that authority for the last six years of his presidency because of disputes over whether to include labor and environmental standards as part of trade deals.
-- from staff and wire reports 
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