By Chau Ngo
The U.S. trade gap stayed flat in January as consumers, wary about job prospects, shied away from imported goods, and the booming energy industry boosted fuel imports.
The Department of Commerce reported the shortfall at $39.1 billion, the biggest since last October,versus a revised December gap of $39 billion. The January deficit was in line with forecasts by economists, who had expected modest consumption of imported products.
The labor market’s weakest performance in three years in January and December prompted consumers to tighten their spending, resulting in a drastic drop in imported cars, cellphones and other household goods. These products, together with high-end goods, tend to suffer in a rough economy.
“There is a strong link between jobs, consumer spending and imports,” said economist Thomas Julien at Natixis North America LLC in New York. “The labor market could have an impact (on imports).”
Domestic consumption accounts for two-thirds of the U.S. economy’s total output, while exports contribute around 14 percent of growth in gross domestic product (GDP), according to the World Bank. Economists said the rise in exports would probably add just a few tenths of a percentage point to GDP growth rate this year.
Despite the decrease in consumer product imports, overall imports edged up 0.6 percent in January from the previous month to $231.6 billion, as a result of increasing fuel imports.
Crude oil imports rose 13 percent, fueled by the domestic energy sector’s rising demand and the cold weather.
The booming U.S. energy industry has enabled the domestic market to be self-reliant in oil products, sending refined product imports to fall. However, crude oil, the input for the sector, is still dependent on imported sources. The increase in crude oil import in January signals an expansion in the industry’s output.
An appetite overseas for American products sent exports to rise 0.6 percent in January to $192.5 billion. Consumer goods, together with gold ore, boosted the export growth and helped offset a drop in refined oil product exports.
“The recovery in Europe is a strong part,” Russell Price, senior economist at Ameriprise Financial Inc. in Detroit, said of the exports increase. “Exports will continue a positive trend in the next few quarters and the next few years.”
The economy posted a 2.4 percent annual growth rate in the fourth quarter last year, lower than an initial estimate of 3.2 percent. Economists said GDP growth may accelerate to 2.8 percent this year but exports will not play an important role.
“I’m very optimistic about exports,” said Julien, the economist at Natixis. “But I don’t think exports will be a strong drive for GDP growth this year, as imports are likely to rise strongly as well.”