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Spokane, Washington  Est. May 19, 1883

Trade deficit near record in January



 (The Spokesman-Review)
Associated Press

WASHINGTON — The monthly trade deficit hit $58.3 billion in January, the second-highest in history, as clothing imports from China surged with the lifting of global quotas.

Consumer confidence, however, rose at the fastest pace in seven months in early March according to a separate AP survey.

The Commerce Department’s trade report released Friday showed a January trade gap that was 4.5 percent higher than December’s $55.7 billion deficit and was just below the all-time monthly record of $59.4 billion set last November.

The U.S. trade gap surged by 24.3 percent in 2004 to set a record for the third straight year at $617.1 billion and private economists said 2005 was likely to post yet another record trade imbalance.

In other economic news, the AP-Ipsos consumer confidence index posted a gain of 6.4 percent in early March to 84.2. It was the biggest one-month advance since last August and reflected newfound optimism about job prospects.

Democrats said the January trade report showed the failure of the administration’s trade and fiscal policies, contending that the record federal budget deficits were contributing to the record trade deficits.

“The ballooning twin trade and budget deficits dramatize the misplaced fiscal priorities of the president and the Republican Congress,” said Sen. Jack Reed, D-R.I.

Sen. Byron Dorgan, D-N.D., called the deepening trade deficit a national crisis and said President Bush should convene an emergency trade summit to develop a comprehensive deficit reduction plan.

“The Bush administration and the Congress have to stop ignoring this crisis in international trade,” Dorgan said. “The longer we ignore it, the more American jobs will move overseas.”

However, private economists contended the chief culprit in the country’s trade woes was a global imbalance in growth, with the U.S. economy forging ahead — boosting consumer demand — while the economies of Europe and Japan have been sluggish, dampening demand for U.S. exports.

“American consumers continue to aggressively shop and they are buying lots of imported products from consumer electronics and apparel to vehicles and everything in between,” said Mark Zandi, chief economist at Economy.com.