U.S. trade deficit hits 5-year high boosted by rising oil prices, cell phones
The U.S. trade deficit jumped to a near five-year high in January as cell phones and rising oil prices helped to push up the import bill, suggesting trade would again weigh on economic growth in the first quarter.
The Commerce Department said on Tuesday the trade gap increased 9.6 percent to $48.5 billion, the highest level since March 2012. The deficit was in line with economists forecasts. December’s trade shortfall was unrevised at $44.3 billion.
When adjusted for inflation, the trade deficit rose to $65.3 billion from $62.0 billion in December. Both the inflation-adjusted exports and imports were the highest on record in January.
The wider trade gap added to weak data such as housing starts, consumer and construction spending in suggesting the economy struggled to regain momentum early in the first quarter after growth slowed to a 1.9 percent annualized rate in the final three months of 2016.
The economy grew at a 3.5 percent pace in the third quarter.
Trade cut 1.7 percentage points from gross domestic product in the fourth quarter. The Atlanta Federal Reserve is forecasting GDP rising at a 1.8 percent rate in the first quarter.
The dollar was trading marginally higher, while prices for U.S. government bonds were little changed. U.S. stock index futures were slightly lower.
The Trump administration is eyeing trade as it seeks 4 percent annual GDP growth. President Donald Trump has vowed sweeping changes to U.S. trade policy, starting with pulling out of the 12-nation Trans-Pacific Partnership trade pact.
Trump also wants to renegotiate the North American Free Trade Agreement (NAFTA), which was signed in 1994 by the United States, Canada and Mexico. Economists, however, warn that the America-first or protectionist policies being pursued by the administration are a threat to the country’s economic health.
OIL IMPORTS SURGE
In January, imports of goods and services increased 2.3 percent to $240.6 billion, the highest level since December 2014. The import bill in part reflected higher oil prices.
The country imported 259 million barrels of crude oil in December, the largest amount since July 2013. The value of petroleum imports was the highest in two years.