Imports were down because of the severe recession, already the longest in a quarter-century.
By MARTIN CRUTSINGER
The Associated Press
WASHINGTON – The U.S. trade deficit plunged in January to the lowest level in six years. While U.S. exports – from farm goods to autos to civilian aircraft – fell sharply, imports fell at an even faster clip as a deepening recession cut demand for goods from abroad.
The Commerce Department said Friday the trade imbalance dropped to $36 billion in January, a decline of 9.7 percent from December and the lowest level since October 2002.
While the improvement was better than the $38 billion deficit that economists had expected, they did not see the development as good news for the economy. Imports were down because of the severe recession, already the longest in a quarter-century, and the spreading weakness globally cut even further into U.S. exports, which had up until recently been one of the few bright spots for the economy.
U.S. manufacturers are now confronted with a darkening picture in which demand for their products is dropping sharply not only at home, but also in foreign markets.
For January, exports of goods and services fell 5.7 percent to $124.9 billion. It was the sixth straight month that exports have fallen, pushing them down to the lowest level in more than two years. Demand fell across a broad spectrum of manufactured goods from heavy machinery to telecommunications equipment. Commercial aircraft shipments dropped by 5.1 percent and sales of U.S.-made autos and auto parts plunged by 28.3 percent.
The reason that the trade deficit narrowed was that imports fell even more sharply in January, declining by 6.7 percent to $160.9 billion, the lowest level for imported goods since March 2005. The decline in imports was led by a 25.2 percent drop in imported crude oil, which fell to $11.9 billion in January with both the level and the average per barrel price dropping to three-year lows.
Economists called the export decline alarming, predicting that it would add to the woes of an economy that was already shrinking at the fastest pace in a quarter-century.