Associated Press / Martin Crutsinger, AP Economics Writer
WASHINGTON (AP) -- The U.S. trade deficit shot up to a record $28 billion in January as Americans' demand for foreign oil hit an all-time high while sales of exports slipped.
The Commerce Department said today that the deficit widened by 13.8 percent in January compared to a $24.6 billion December deficit, stark evidence that the country began the year with the same weakness in trade that was exhibited throughout 1999.
For all of last year, the deficit soared to an all-time high of $267.6 billion, 62.9 percent above the previous record, an imbalance of $164.3 billion in 1998.
The widening trade deficit has been the biggest adverse effect on the U.S. economy from the 1997-98 Asian currency crisis, which cut sharply into American exports because of widespread economic weakness overseas.
While many crisis countries are now enjoying strong economic rebounds, the U.S. trade deficit is expected to worsen further this year, reflecting continued strong consumer demand in this country and a rising foreign oil bill.
"Our spending continues to outpace our production," said William Cheney, chief economist at John Hancock in Boston. "This could result in inflation, but instead we simply make up the difference by importing even more from overseas."
For January, imports of foreign petroleum climbed to a record high of $7.87 billion, more than double the level of a year ago, when the country was enjoying a big slide in petroleum prices.
The price of crude oil hit $23.18 per barrel in January, the highest level since a $25.75 price in December 1990 on the eve of the Persian Gulf War.
The Clinton administration, concerned about the political fallout of steeply rising prices for gasoline and home-heating oil, has been lobbying the Organization of Petroleum Exporting Countries to step up production.
The widening trade deficit is presenting the administration with political problems as it tries to sell Congress with a landmark trade agreement with China.
As part of the process of gaining admission to the World Trade Organization, the Chinese government agreed to lower its barriers to American manufactured goods and farm products. But to get these trade concessions, Congress must end the annual reviews of China's trade privileges with the United States and grant the country permanent normal trade relations.
Opponents of the effort say that China has failed to live up to many of its past trade commitments and the United States needs to retain the annual review in order to keep pressure on the Chinese government to improve its human rights record.
For January, America's deficit with China shot up 7.6 percent to $6 billion, the highest since November, as imports from China rose while U.S. sales into the Chinese market fell.
The deficit with China far surpassed the imbalance with the longtime front-runner in this category, Japan. America's deficit with Japan shrank by nearly 20 percent to $5.58 billion.
Some experts believe 2000 will be the year when China's surplus permanently surpasses Japan's trade surplus with this country. The administration, however, argues that the market-opening deal China is offering U.S. exporters will mean billions of dollars in increased sales for American companies and farmers.
In January, total U.S. exports dipped 1.8 percent to $84.06 billion, still the second-highest level on record, following a record $85.56 billion in sales in December.
The export decline reflected a drop of $347 million in sales of chemicals and other industrial supplies, a decrease of $355 million in sales of U.S. semiconductors and a decline of $231 million in exports of consumer goods such as stereo equipment and household appliances.
Imports hit another monthly record of $112.07 billion in January, up 1.7 percent from the December record.
The increase was paced by the $919 million increase in oil imports. Other big import increases were in foreign autos, which rose by $677 million and imports of capital goods, including computers and telecommunications equipment, which climbed by $207 million.
America's deficit with Canada, its biggest trading partner, set an all-time record of $4.29 billion, up 24.4 percent from December.
The deficit with Mexico, the other partner in the North American Free Trade Agreement, more than doubled in January to $1.77 billion. America's deficit with the 15-nation European Union shrank by a slight 0.9 percent to $3.86 billion in January.:
