MercoPress. South Atlantic News Agency

US trade deficit soars to 46.3 billion in spite of record exports

University of Maryland professor Peter Morici: US living beyond its means

Stock markets have fallen after figures showed the US trade deficit had widened much more than expected in January. The US Commerce Department said the deficit had widened to 46.3 billion US dollars from 40.3 billion USD in December.

Earlier, Chinese government data showed a surprise trade deficit for the first time since March last year. The announcement also affected markets in Europe and Asia.

The Nikkei ended the day down 1.46% and London and Frankfurt closed down 1.5% and 0.9% respectively.

The 15% increase caused concern amongst investors and shares on Wall Street fell. Analysts blamed demand for foreign cars and the surging price of oil for pushing up imports. US exports rose 2.7% to an all-time high of 167.7 billion USD but imports rose to 214 billon USD.

On one hand, some economists say stronger import growth means US are consuming more goods -- and that's good news for the US economy. But others argue a wider deficit is bad news no matter what the cause, because it points to greater imbalances in the world economy.

“The trade deficit means Americans are living beyond their means. They're not making the goods they want to consume,” said Peter Morici, a University of Maryland professor and former chief economist at the U.S. International Trade Commission.

Morici points specifically to the trade gap between China and the United States, which is the world's largest. In January alone, China exported 23.7 billion USD more in goods and services to the United States than it imported.