BLBG: U.S. Trade Deficit Probably Narrowed to Smallest Since 2002
The U.S. trade deficit likely shrank in December to the smallest in more than six years as the recession pushed oil and consumer spending lower, reducing imports, economists said before a government report today.
The gap between imports and exports narrowed to $35.7 billion, the lowest level since October 2002, from $40.4 billion in November, according to the median forecast of 70 economists surveyed by Bloomberg News.
Mounting job losses, a lack of available credit and a global downturn signal imports and exports will fall further. Some U.S. firms are lobbying for a “Buy American” provision in President Barack Obama’s stimulus plan, while nations such as France and Russia are taking steps to protect local jobs and production.
“The boost from trade to our economy has expired and is on hold for the future,” said John Herrmann, president of Herrmann Forecasting LLC in Summit, New Jersey. “The more this recession intensifies, the louder will be the clamoring for protectionist policies, both in the U.S. and abroad.”
The Commerce Department will issue the report at 8:30 a.m. in Washington. Economists’ estimates of the deficit ranged from $31 billion to $45 billion.
The country’s imported-oil bill probably eased as a barrel of crude on the New York Mercantile Exchange cost an average $42.04 in December, down from $57.44 the prior month. Crude oil prices have fallen further this month.
Deepening Recession
U.S. gross domestic product is forecast to contract again this quarter after shrinking at a 3.8 percent annual pace from October to December, the most since 1982, as consumer spending, about 70 percent of the economy, plunged.
Trade, which has added to the U.S. economy since the first three months of 2007, will be less of a help in coming quarters, economists predict.
PPG Industries Inc., the world’s second-biggest paint maker, said last month that it may cut as many as 4,500 jobs because of weak global demand from automakers and homebuilders.
“The regions outside of North America, which had been really helping PPG in the first three quarters of last year, have sort of caught the disease that started here in the U.S. with the credit crisis,” Chief Executive Officer Charles E. Bunch said Jan. 27 in an interview.
Steel companies including U.S. Steel Corp. and Nucor Corp. are pushing for a mandate that projects included in Obama’s stimulus plan use American-made iron, steel and other manufactured goods to build roads, bridges and tunnels.
‘Buy American’ Pushback
Opponents of the provision, such as Caterpillar Inc., Microsoft Corp. and the U.S. Chamber of Commerce, have said it might spur protectionist measures around the world.
Congressional leaders are crafting an approach that would give preference to U.S. products only as long as such a move doesn’t violate trade rules.
The White House has demanded that the provisions satisfy U.S. obligations under the World Trade Organization.
Russia raised import duties on cars and trucks this year to protect its slumping producers. French automakers PSA Peugeot Citroen and Renault SA will get government loans after promising to keep jobs and production in the country.
European Union finance ministers decried protectionism when they met this week in Brussels to discuss how to help banks take toxic assets off their books, rescue carmakers and bring the euro-region economy out of a recession.
The International Monetary Fund has forecast global growth of 0.5 percent in 2009, the weakest pace since World War II.
