Decrease In U.S. Trade Deficit Reflects Weak Economy

ByJohn S. McClenahen Although the U.S. continued to import far more goods and services than it exported in January, the deficit with the rest of the world shrank. During this year's first month, imports of $123 billion and exports of $81.9 billion produced a trade deficit of $41.1 billion, some $3.8 billion less than December 2002's revised deficit of $44.9 billion, says the U.S. Commerce Department. January's trade deficit also was $1.3 billion less than the $42.4 billion that economists generally expected. In January, the U.S. posted goods deficits with most of its major trading partners, including Western Europe ($7 billion), Japan ($5.2 billion), Canada, ($5 billion), and the world's petroleum-producing countries ($3.6 billion). January's decrease in the trade deficit "is primarily a reflection of a weak U.S. economy," says Jerry J. Jasinowski, president of the Washington, D.C.-based National Association of Manufacturers (NAM). Two-thirds of January's improvement was from lower imports, mainly consumer goods and autos, NAM notes. "With consumer confidence dropping further in February, this trend likely will continue for several months," predicts Jasinowski. However, the NAM president believes U.S. exports could improve during the second half of 2003 if the Middle East situation stabilizes and the U.S. dollar remains relatively weak against other major currencies.