America's trade deficit climbed to an all-time high of $12.1 billion in February as the imbalance with Japan surged by 21 percent and U.S. merchandise exports fell to their lowest level in a year.
The new report Friday dramatically underscored the biggest problem facing an otherwise stellar U.S. economy, a widening trade deficit that is likely to grow much worse as the year progresses, given the economic problems in many Asian countries.In a second report, the Federal Reserve said that output at the nation's factories, mines and utilities rose 0.2 percent in March after two consecutive monthly declines.
However, all the strength came from a bounceback in utility production reflecting a return to more normal weather patterns. Output at U.S. factories fell for a second month as manufacturers continued to cut back production in part because of the weakness in export demand.
The Commerce Department said the February deficit in goods and services was 4.2 percent higher than a revised $11.6 billion imbalance in January.
For the first two months of this year, the deficit is running at an annual rate of $142 billion, far surpassing last year's nine-year high of $113.7 billion.
It is these figures that has stirred alarm in the Clinton administration, where there is a concern that huge trade deficits will provide ammunition to opponents of the president's free trade policies.
For February, the U.S. deficit with Japan widened to $5.3 billion from $4.4 billion the previous month. It was the worst showing since a $5.9 billion deficit last October, reflecting the fact that U.S. exports to Japan dipped to their lowest level in three years.
America's deficit with China narrowed by 17.5 percent to $3.5 billion in February, reflecting the fact that the United States purchased fewer toys, office machines and telecommunications equipment.
However, unlike the overall figures, the country-by-country numbers are not adjusted for normal seasonal variations. America's deficit with China normally improves after the Christmas sales season.
America's deficit with the newly industrialized countries of Asia, a group that includes South Korea, narrowed sharply in February to $885 million compared with $2.2 billion in January, reflecting in part higher U.S. exports of aircraft.
But economists are forecasting that the deficit in coming months with Asia will balloon as the full impact of the economic troubles in the region are felt. The sharp depreciation of Asian currencies means U.S. products are more expensive.
One bright spot in the trade figures for February was a 16.2 percent drop in America's foreign oil bill, which fell to $4 billion, reflecting smaller volume and a sharp drop in price. The average barrel of crude oil dropped to $13.11 in February, the lowest level in nearly four years.