The United States’
foreign trade deficit now exceeds $60 billion. The nation’s trade deficit
jumped 4.3 percent over the $58.5 billion posted in January, 2005 to the
highest ever recorded deficit of $61 billion in February.
The deficit has risen in part because oil prices have risen sharply and
imports of textiles and clothing have grown. U.S. exports have shown little
growth, while imports continue to surge.
The nation’s trade deficit with China narrowed to $13.9 billion--
coming down from $15.3 in January--even though imports of Chinese textiles
have surged. At the same time, imports from Japan
and the European Union continue to outstrip exports, contributing to the U.S.
travel industry slowed and sales of cars and auto parts to foreign countries
fell in February as American exports were left almost unchanged at $100.5
billion. Led by industrial supplies like oil and steel, U.S. imports rose by 1.6 percent
to $161 billion. This 4.3 percent increase in February’s trade deficit
followed a five percent rise in January, 2005.
Most economists consider trade deficits to present both costs and benefits.
On the positive side, American consumers benefit by consuming more goods and
services than they could produce domestically, increasing the choice and
variety of goods. On the negative side, deficits increase U.S. indebtedness to the rest of
the world--deficits must be financed by borrowing from the rest of the world.
This borrowing transfers ownership of American assets to foreign investors.
This newest report has prompted some analysts to re-think their previous
predictions for U. S.
economic growth. David Greenlaw and Ted Wiesman at Morgan Stanley adjusted their forecast for
first-quarter growth in U.S. GNP (gross national product) downward from 4.1
percent to only 3.1 percent. Although the real trade gap for March narrowed
slightly, Greenlaw and Wiesman
said that weakening American exports will affect GDP.