Surging oil prices and Chinese textile imports helped boost the U.S. trade deficit to a record $61 billion in February, the Commerce Department...
Surging oil prices and Chinese textile imports helped boost the U.S. trade deficit to a record $61 billion in February, the Commerce Department reported yesterday, suggesting that economic growth this year wasn’t as robust as previously thought.
The report calls for tougher curbs on Chinese clothing imports and for Beijing to stop undervaluing its currency, which critics say gives its exports an unfair advantage in global markets.
Some analysts said the deficit primarily reflected a strong U.S. economy, as U.S. consumers continued to gobble up foreign goods while consumers in sluggish European and Japanese economies couldn’t do much to reciprocate.
“The problem is, we have an insatiable appetite for imports, especially from Asia,” said Steven Wood, chief economist at Insight Economics in Danville, Calif.
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“That continues to wreak havoc with the trade balance.”
Americans ultimately can’t keep buying more from abroad than they sell, Wood said. “Eventually, you’ll go deeper and deeper into debt, and that comes back to bite you.”
Also getting blame for the record trade gap was the rising price of imported oil. With petroleum prices having leapt further in March, the trade deficit is expected to set another record.
The February deficit grew 4.3 percent from a revised $58.5 billion in January and was well above consensus forecasts of $59 billion. It topped the previous record of $59.4 billion set in November.
The basic culprit: Imports grew faster than exports. Imports in February jumped 1.6 percent to $161.5 billion, while exports rose 0.1 percent to $100.5 billion.
One factor behind the jump was ballooning U.S. purchases of Chinese textiles and apparel, triggered by the Jan. 1 expiration of a global quota system that kept China’s market share artificially low.
Under pressure from the U.S. textile industry, the Bush administration is considering imposing curbs on certain types of Chinese clothing products.
However, the United States’ overall deficit with China fell 9.2 percent in February from the previous month, although it was far higher than the year-ago level.
Many analysts lowered estimates yesterday for first-quarter U.S. economic growth, as the higher-than-expected deficit suggested that U.S. companies didn’t benefit as much from U.S. consumer spending.
Ian Shepherdson, chief U.S. economist for High Frequency Economics in Valhalla, N.Y., cut his estimate to 3.5 percent from 4 percent.