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U.S. trade gap shrinks
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April 18, 2001: 10:06 a.m. ET
Deficit fell to $27 billion in February, lowest in over a year
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NEW YORK (CNNfn) - The U.S. trade deficit fell to the lowest level in 14 months in February as the slowing economy reduced demand for imports of everything from oil to clothing.
The nation's trade deficit shrank to $27 billion in February from $33.3 billion in January, the Commerce Department said, marking a bigger improvement than economists had been forecasting.
The smaller deficit reflected a 4.4 percent decline in imports of cars, toys, games and televisions, among other products. It was the biggest monthly drop since the government started tracking monthly trade flows in goods and services in 1992.
The politically sensitive deficit with China narrowed sharply in February but the imbalance with Japan widened.
Economists have said the trade deficit could improve this year as the slowing U.S. economy cuts into what has been strong demand by American consumers for products made abroad.
Separately, the index of leading indicators, meant to forecast the U.S. economy's performance in coming months, fell 0.3 percent in March after a 0.2 percent decline in February, the Conference Board reported. The business research group's report was in line with forecasts by private economists.
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One month is not a trend. Just the slowing U.S. economy is not enough to quell current account concerns in the long run.
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David Gilmore at FX Analytics |
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Still, analysts cautioned against reading too much into the one-month drop. January's deficit of $33.3 billion was the second-highest on record and for years America's trade deficit exploded as the fast-growing U.S. economy sucked in imports from around the world.
"One month is not a trend," David Gilmore, a partner at FX Analytics in Stamford, Conn., told Reuters news agency. "Just the slowing U.S. economy is not enough to quell current account concerns in the long run."
The deficit for all of 2000 climbed to a record $368.9 billion, 39 percent higher than the previous high of $265 billion set in 1999. Critics of U.S. trade policy contend that the Clinton administration's insistence on pursuing big free-trade agreements to open up foreign markets to U.S. goods has been a failure.
But President Bush signaled in a speech Wednesday that his administration will be even more free-trade oriented. He will travel to Canada Friday for meetings with 33 leaders of the Western Hemisphere as they try to step up efforts to create the world's largest free-trade area, stretching from the Canadian Arctic to the tip of Argentina.
-- from staff and wire reports 
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