Trade Deficit in U.S. Little Changed as Imports, Exports Grow

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Luke Sharett/Bloomberg via Getty ImagesContainer ships at the Port of Virginia APM Terminal in Portsmouth, Va.
By Shobhana Chandra

The trade deficit in the U.S. was little changed in January as exports and imports grew, a sign economies throughout the globe are picking up.

The gap widened by 0.3 percent to $39.1 billion from $39 billion in the prior month that was larger than previously estimated, Commerce Department figures showed Friday in Washington. The median forecast in a Bloomberg survey of 70 economists called for a $38.5 billion deficit. Exports and imports each increased 0.6 percent.

The figures showed global demand for American-made goods is likely to strengthen as markets overseas, including emerging nations such as China, improve. An increase in household spending, the biggest part of the economy, will help propel U.S. purchases of goods from other parts of the world.

"Import growth will increase as the economy expands," Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Fla., said before the report. At the same time, "any widening in the trade deficit is going to be largely transitional. The trade deficit is likely to remain relatively contained this year."

Bloomberg survey estimates ranged from a trade deficit of $36 billion to $42.1 billion. The Commerce Department initially reported a $38.7 billion shortfall for December.

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Another report Friday showed payrolls rose by 175,000 in February, exceeding the median forecast of economists surveyed by Bloomberg that projected a 149,000 gain, %VIRTUAL-article-sponsoredlinks%according to figures from the Labor Department. The jobless rate unexpectedly rose to 6.7 percent from a more than five-year low of 6.6 percent in January as people entering the workforce were unable to find employment.

Exports increased to $192.5 billion in January, Friday's trade report showed. The breakdown of the data was less encouraging as sales on non-monetary gold, which are often volatile, surged by $1.86 billion in the first month of the year. That made up for a drop in foreign demand for food, fuel oil and automobiles.

Imports climbed to $231.6 billion, the most since October, from $230.3 billion in the prior month. Purchases of foreign-made capital equipment such as telecommunications gear and industrial machines, rose to a record, pointing to a pickup in U.S. business investment.

The import figures also reflected a surge in demand for crude oil. The U.S. bought 256.5 million barrels in January, the most since July. That swamped a drop in price to $90.21 that was the lowest since February 2011.

Excluding petroleum, the trade shortfall narrowed to $19.8 billion from $23.5 billion.

Growth Headwind

After eliminating the influence of prices, which renders the numbers used to calculate gross domestic product, the trade deficit shrank to $48.5 billion from $49.2 billion in December. It was still higher than the fourth-quarter average of $47.5 billion, indication trade so far is a slight headwind for the world's largest economy.

Overseas markets are cooling. China this month set a 7.5 percent target for economic growth in 2014, a pace that may make it more difficult to achieve the leadership's goals of curbing credit risks and stemming the pollution choking the nation's biggest cities.

Brazil, Latin America's largest economy, expanded 0.7 percent in the fourth quarter from the prior three months, when it contracted, the national statistics agency said on Feb. 27.

European Central Bank President Mario Draghi signaled this week that deflation risks in the euro region are easing for now after new forecasts showed that inflation will approach their target by the end of 2016 as the economy revives.

To contact the reporter on this story: Shobhana Chandra in Washington at

9 Numbers That'll Tell You How the Economy's Really Doing
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Trade Deficit in U.S. Little Changed as Imports, Exports Grow
The gross domestic product measures the level of economic activity within a country. To figure the number, the Bureau of Economic Analysis combines the total consumption of goods and services by private individuals and businesses; the total investment in capital for producing goods and services; the total amount spent and consumed by federal, state, and local government entities; and total net exports. It's important, because it serves as the primary gauge of whether the economy is growing or not. Most economists define a recession as two or more consecutive quarters of shrinking GDP.
The CPI measures current price levels for the goods and services that Americans buy. The Bureau of Labor Statistics collects price data on a basket of different items, ranging from necessities like food, clothing and housing to more discretionary expenses like eating out and entertainment. The resulting figure is then compared to those of previous months to determine the inflation rate, which is used in a variety of ways, including cost-of-living increases for Social Security and other government benefits.
The unemployment rate measures the percentage of workers within the total labor force who don't have a job, but who have looked for work in the past four weeks, and who are available to work. Those temporarily laid off from their jobs are also included as unemployed. Yet as critical as the figure is as a measure of how many people are out of work and therefore suffering financial hardship from a lack of a paycheck, one key item to note about the unemployment rate is that the number does not reflect workers who have stopped looking for work entirely. It's therefore important to look beyond the headline numbers to see whether the overall workforce is growing or shrinking.
The trade deficit measures the difference between the value of a nation's imported and exported goods. When exports exceed imports, a country runs a trade surplus. But in the U.S., imports have exceeded exports consistently for decades. The figure is important as a measure of U.S. competitiveness in the global market, as well as the nation's dependence on foreign countries.
Each month, the Bureau of Economic Analysis measures changes in the total amount of income that the U.S. population earns, as well as the total amount they spend on goods and services. But there's a reason we've combined them on one slide: In addition to being useful statistics separately for gauging Americans' earning power and spending activity, looking at those numbers in combination gives you a sense of how much people are saving for their future.
Consumers play a vital role in powering the overall economy, and so measures of how confident they are about the economy's prospects are important in predicting its future health. The Conference Board does a survey asking consumers to give their assessment of both current and future economic conditions, with questions about business and employment conditions as well as expected future family income.
The health of the housing market is closely tied to the overall direction of the broader economy. The S&P/Case-Shiller Home Price Index, named for economists Karl Case and Robert Shiller, provides a way to measure home prices, allowing comparisons not just across time but also among different markets in cities and regions of the nation. The number is important not just to home builders and home buyers, but to the millions of people with jobs related to housing and construction.
Most economic data provides a backward-looking view of what has already happened to the economy. But the Conference Board's Leading Economic Index attempts to gauge the future. To do so, the index looks at data on employment, manufacturing, home construction, consumer sentiment, and the stock and bond markets to put together a complete picture of expected economic conditions ahead.
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