AP News

Ahead of the Bell: US Trade Gap


WASHINGTON (AP) — The U.S. trade deficit likely widened in January, reflecting increases in purchases by Americans of foreign-made goods.

Economists forecast the deficit increased to $43 billion in January, according to a survey by FactSet. The Commerce Department will release the report at 8:30 a.m. EST Thursday.

In December, the deficit narrowed to $38.5 billion as a jump in exports lowered the trade gap to nearly a three-year low.

A narrower trade gap boosts growth because it means U.S. companies earned more from overseas sales while U.S. consumers and businesses spent less on foreign products.

The December jump in exports helped the economy grow just barely at the end of last year instead of shrinking. The trade report was not available when the government made its first estimate of the economy's overall performance in the fourth quarter.

Economists see the trade picture brightening a bit in 2013, helped in part by an energy production boom in the United States.

Production of oil and natural gas has been rising in the United States because drillers have learned to tap once-inaccessible reserved trapped in shale formations. New techniques such as horizontal drilling and hydraulic fracturing, or fracking, have made this possible.

Increased production has lowered U.S. prices of crude oil and natural gas, which refiners use to make gasoline, diesel and other fuels. Crude in the U.S. has been selling for $20 per barrel cheaper than international crude. With lower input costs, U.S. refiners are making enormous amounts of petroleum-based fuels and selling them on the international market at a huge profit.

For all of 2012, the trade deficit narrowed 3.5 percent to $540.4 billion.

Many economists expect the trade deficit will narrow further in 2013. That forecast is based on an assumption that the European debt crisis will stabilize, helping to boost exports to that region and economic growth in Europe will continue to rebound.

The politically sensitive trade deficit with China rose to a record $315.1 billion last year, the largest imbalance ever with a single country. That could add pressure on the Obama administration to take a harder line on China's trade practices. Some U.S. manufacturers contend that China keeps the value of its currency artificially low to make its exports to the U.S. cheaper.


Burger King's Young Buns
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus