US breaks deficit records
Thursday 11 March 2004, 8:09 Makka Time, 5:09 GMT
The US trade deficit has hit an all-time high of $43.1 billion, disproving forecasts that a recent fall in the dollar would help exports.
Figures for January show that imports stayed close to historic highs after a rise in imported oil prices.
Even the politically sensitive trade deficit with China increased to $11.5bn, up from $9.9bn in December.
"To me this is very worrisome. The trade deficit is not improving. It is getting worse despite the dollar depreciation," said Wells Fargo Banks chief economist Sung Won Sohn.
Forecast mistake
In theory, a weakening dollar should have made US exports cheaper and thus more competitive in overseas markets.
The idea was that it should make imports more expensive, reducing demand for foreign goods.
However, analysts noted there were some one-off factors behind the worse-then-expected figures.
"The trade deficit is not improving. It is getting worse despite the dollar depreciation,"
Sung Won Sohn
Chief Economist
Wells Fargo Bank
Imported oil prices during January were at their highest level since March 2003, which led to a 10% rise in the US's petroleum deficit.
Also, exports were hit by restrictions on meat exports following outbreaks of mad cow disease and bird flu.
China
The trade deficit with China rose after imports from the country grew by 6.6%.
The US government has been placing pressure on China to revalue its currency against the dollar.
The yuan is currently pegged at 8.28 yuan to the dollar, but US manufacturers have complained the currency is undervalued by as much as 40% giving Chinese exporters an unfair advantage.
America's total outstanding debt now stands at over $7,112,000,000,000, which means that every single US citizen has a share of just over $24,000.
AFP
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