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Posted at 10:28 AM ET, 03/10/2011

U.S. trade deficit widens despite record exports

By Howard Schneider

The U.S. trade deficit jumped nearly 15 percent in January as strong demand for imports reflected economic growth but raised concerns that American exports -- despite a record-setting month -- were not keeping pace.

The $46 billion shortfall, up from $40.3 billion in December, partly reflected rising world oil prices. But it was largely driven by consumers buying up imported goods and businesses bringing in capital and industrial goods from overseas.

America's trade deficit with China accounted for about half the overall shortfall, rising to $23.3 billion from $20.7 billion the month before.

Commerce Secretary Gary Locke, in a statement, emphasized the record export number. U.S. firms recorded $167.7 billion in overseas sales in January, up 2.7 percent from the month before.

"We've now seen private-sector job growth for 12 straight months, and increasing U.S. exports play a key role in that," Locke said.

But others noted that a singular focus on exports glosses over the rest of the equation. The higher-than-expected jump in the deficit, "will be a bigger drag on...real GDP growth," said Barclays Capital, which has scaled back its expectations of U.S. economic growth for the first three months of the year from a 3.5 percent annual rate to 3 percent.

"To the extent that this surge reflects the strength of domestic demand...it isn't necessarily a disaster," wrote analysts at Capital Economics. "Nevertheless, it is a concern."

By Howard Schneider  | March 10, 2011; 10:28 AM ET
Categories:  Trade  
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Comments

Gary Locke spins the record export number is the void of a fifteen percent jump in the U.S. trade deficit... with only the positive half of the story, our Commerce Secretary qualifies as a Congressman-in-Training.

Posted by: Anonymous | March 10, 2011 2:25 PM | Report abuse

The foreign trade deficit is a free-flowing fiscal hemhorrage on the US economy. $45 billion a month rolls up to $540 billion a year, disappearing from the American economy, never to return.

It would be amazing if our economy had withstood even a decade of this kind of economic destruction without a collapse, but it hasn't. This trade deficit is rapidly abolishing the jobs of the American middle class. If we don't regulate trade with tariffs, we will end the trade deficit with national bankruptcy.

$540 billion a year is about $1800 being lost by each man, woman, and child in the United States, each year, and each year, the trade deficit grows. The US economy has an aggregate net worth of around $60 trillion, and the trade deficit is destroying about 1% of that net worth each year, and accelerating.

Raise tariffs now, or abandon hope of a sustainable economic recovery.

Posted by: lonquest | March 10, 2011 3:45 PM | Report abuse

I do economic risk analysis and projects for a living and have been posting for the past several months that we are going see a catastrophic collapse of our economy sometime before summer. About the only news is, it is happening before the looming massive dump of unemployed veterans and public employees hit, which isn't expect to really hot until late June. So, this is merely the tip of the iceberg. The "Free Trade" economic policies have so fouled our nest that even Wall Street's predators cannot survive. ALong about AUgust or September you're going to see screaming mobs in the streets, asking for the heads of investors, CEO's and other executives, and that is simply going to swamp Washington. We need tariffs or we face an very real revolution in this country and whether those are 25% or 50% coupled with duties and fees on consumer goods and services all depends upon the willingness of Washington and "the business community" to act rationally and end the "global economy" excess immediately and enact modest tariffs and other legislation to *reverse* job outsourcing now. K-Street blather and the dishonest blaming US workers, our educational system, taxes, et al isn't going to cut it, either. It's to put up, put this country to harbors you FIRST, or get out.

Posted by: mibrooks27 | March 10, 2011 5:06 PM | Report abuse

@mibrooks27 I do agree although I hope the collapse holds off a few extra months. It's coming there is no doubt about it but no one in Washington appears to have a clue. It's not even being discussed publicly yet. Well many people haven't been fooled. Keep trying to educate because it may save a few more.

Posted by: Desertdiva1 | March 10, 2011 6:58 PM | Report abuse

The plan was to stimulate the economy by increasing the money supply to the point where everyone starts spending their savings before the dollar becomes worthless. Maybe the plan is working.

Posted by: Anonymous | March 10, 2011 7:47 PM | Report abuse

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