- The Washington Times - Thursday, April 18, 2002

ASSOCIATED PRESS

The improving economy helped drive up the U.S. trade deficit in February to its highest point in 10 months as Americans' appetite for foreign-made cars, televisions and other goods increased.

The trade gap widened to $31.5 billion, an 11.6 percent increase over January's deficit of $28.2 billion, the Commerce Department reported yesterday.

With imports growing more quickly than exports, the trade gap was widened by a larger-than-expected amount. February's deficit was the biggest since a $31.9 billion shortfall in April 2001.

Though U.S. companies trying to sell their goods abroad usually are not thrilled to see the trade gap expand, there was a silver lining: Stronger demand from U.S. businesses and consumers for imported goods is a sign the U.S. economy is rebounding from a recession.

"Wider trade deficits are never really good, but in this case, we can't really complain," said economist Joel Naroff of Naroff Economic Advisors. "The U.S. economy is picking up steam."

Economists predict that the trade gap will continue to widen this year as the United States recovers faster from its recession than other nations struggling with their own economic slumps. Under this scenario, Americans would buy imported goods at a faster pace than foreigners would consume U.S. exports.

In February, imports of goods and services rose nearly 4 percent to $110.7 billion.

They rose more than three times as much as exports, which edged up to $79.2 billion in February, a 1.2 percent increase over January's level.

"Exports will continue to grow as the global economy recovers, but the pace of expansion will be modest compared to import growth," predicted Sung Won Sohn, Wells Fargo's chief economist.

Growth in exports was crimped by continued economic weakness overseas and the high-flying U.S. dollar, economists said.

The dollar has risen 30 percent against other currencies since 1997, a huge source of concern and irritation for U.S. manufacturers.

The strong dollar makes U.S. exports more expensive for foreigners to buy.

But it also makes the cars, televisions and other foreign goods that Americans crave cheaper.

Sales of imported cars and trucks, along with parts and engines, jumped to $16.5 billion in February, the highest level since October 2000.

Imported consumer goods, including televisions, toys and furniture rose to $24.4 billion in February.

Imported capital goods, such as semiconductors and telecommunications equipment, grew by $480 million to $23.8 billion.

On the exports side, sales of American-made capital goods dropped by $237 million in February to $23.6 billion. Airplanes, semiconductors and drilling equipment had the biggest losses for the month.

But those declines were offset by other export gains. Exports of foods, feeds and beverages rose to $4.3 billion in February, the highest level since February 1998. Sales of American-made cars and a variety of consumer goods to other countries also rose.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide