WASHINGTON: The US trade deficit in goods increased moderately in January, with both imports and exports rising solidly, leaving trade on track to have little or no impact on gross domestic product growth early in the first quarter.
The goods trade deficit widened 2.0% to $91.5 billion, the Commerce Department said on Tuesday. This left the goods trade deficit slightly above the fourth-quarter average.
“Trade will probably be starting out the first quarter on track to make a roughly neutral contribution (to GDP),” said Lou Crandall, chief economist at Wrightson ICAP.
Goods imports increased 3.4% to $265.3 billion. Motor vehicle imports surged 9.0% while imports of consumer goods jumped 6.4%. There were also increases in imports of food and capital goods. But imports of industrial supplies, which include crude oil, fell as did those of other goods.
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Exports of goods shot up 4.2% to $173.8 billion, boosted by a 14.8% jump in consumer goods. Motor vehicle exports accelerated 8.2%. Exports of capital goods and food also increased strongly. Shipments of industrial supplies, however, rose moderately and exports of other goods fell.
A smaller trade deficit was one of the contributors to the economy’s 2.7% annualized growth pace in the fourth quarter. The other boost to growth came from inventories.
There are, however, signs that inventories could be a drag on GDP growth this quarter as businesses either liquidate unwanted goods or hold back placing large orders for merchandise amid fears of a recession this year.
The so-called advance indicators report from the Commerce Department on Tuesday also showed wholesale inventories falling 0.4% last month after gaining 0.1% in December, reflecting drops in both durable and nondurable goods.
Stocks at retailers rose 0.3% after increasing 0.4% in December. Motor vehicle inventories climbed 0.6% after advancing 1.4% in December. Excluding motor vehicles, retail inventories rose 0.2% after gaining 0.1% in December. This component goes into the calculation of GDP.
Growth estimates for the first quarter are currently as high as a 2.8% annualized rate, largely thanks to strong consumer spending and factory production.
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