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Published: Wednesday, 4/14/2010

Trade gap at $39.7B, highest in 16 months


WASHINGTON - The U.S. trade deficit widened more than expected in February as a small gain in exports to the highest level in 16 months was offset by a bigger jump in imports, reflecting increased demand for consumer goods.

The wider deficit was a sign of a rebounding U.S. economy. Economists expect the trade deficit to rise this year but hope that expanding exports will continue to lift the fortunes of American manufacturers.

The Commerce Department reported yesterday that the deficit for February increased 7.4 percent to $39.7 billion. That was larger than the $38.5 billion deficit economists had expected. Exports edged up 0.2 percent while imports jumped 1.7 percent.

The politically sensitive deficit with China fell to $16.5 billion in February, the lowest level in 11 months, but was still the biggest trade imbalance the United States has with any country. The slight improvement was not likely to lessen pressure on the Obama Administration to impose trade sanctions on China unless the country begins to allow its currency to start rising again in value against the dollar.

Scott Paul, executive director of the Alliance for American Manufacturing, said the U.S.-China trade deficit has already cost 2.4 million manufacturing jobs, underscoring the urgency to do something.

The February deficit was the highest since December and followed a revised $36.95 billion imbalance in January.

In the first two months of this year, the deficit was running at an annual rate of $459.9 billion, up 21.5 percent from a $378.6 billion imbalance recorded in 2009. That was the smallest trade gap in eight years, reflecting the severe U.S. recession that depressed demand for imports.

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