Rep. Ryan responds to rising U.S. trade deficits in 2014

Staff/wire report

YOUNGSTOWN

The U.S. trade deficit in December jumped to the highest level in more than two years as exports fell and Americans bought a record amount of imports — a potentially worrisome development that could weigh on overall economic growth, analysts say.

The deficit jumped 17.1 percent to $46.6 billion in December, resulting in the biggest imbalance since November 2012, the Commerce Department reported Thursday. The widening trade gap reflected a drop in exports, which retreated 0.8 percent to $194.9 billion. Meanwhile, imports soared 2.2 percent to $241.4 billion.

U.S. Rep. Tim Ryan of Howland, D-13th, blamed trade agreements in a conference call Thursday morning.

“I know people in Akron, Ohio, and Youngstown, Ohio, and down the Ohio River can see how these trade agreements have hurt us going back to NAFTA [North American Free Trade Agreement],” he said. “We’ve seen the factories close. We’ve seen them move out.”

Economists were split on the implications of the bigger-than-expected December trade deficit. The government estimated last week that the overall economy grew at a moderate 2.6 percent rate in the final three months of 2014 after turning in a sizzling 5 percent growth rate in the July-September period.

Paul Ashworth, chief U.S. economist at Capital Markets, said he believed much of the December trade data already was reflected in the first GDP report released last week. But Jennifer Lee, senior economist at BMO Capital Markets, said she thought the trade-gap numbers, along with weaker growth in business stockpiles, could trim as much as a 0.5 percentage point from the government’s estimate.

“This is not good news for the final measure of economic growth,” she said in a research note.

The deficit for 2014 overall increased to $505 billion, up 6 percent from the 2013 deficit of $476.4 billion, the Commerce Department said. Economists expect the deficit to widen further in 2015 as strong growth in the United States boosts imports, while weak growth overseas and a rising dollar continue to depress exports.

The $505 billion deficit for the year was the largest imbalance since a $537.6 billion deficit in 2012.

The economy expanded 2.4 percent in 2014, with trade trimming growth by 0.2 percentage point. Many economists believe growth in 2015 will hover slightly above 3 percent, giving the country the best growth in a decade.

The trade deficit would have been even larger last year if it weren’t for the energy boom in the United States. Higher production at home has been lowering America’s reliance on foreign oil. For the year, petroleum imports fell 9.6 percent to $334.1 billion, the lowest level for imports since 2009. U.S. petroleum exports jumped 5.9 percent to a record $45.7 billion.

The widening trade deficit comes at a time when the Obama administration is hoping to finally get Congress to approve the fast-track authority it needs to wrap up a major 12-nation trade agreement with Pacific Rim countries known as the Trans-Pacific Partnership.

The administration sees the trade deal as one of the areas where the president may be able to find common ground with Republicans, who now for the first time in his presidency control both houses of Congress.

“Fast-track is not the way to go,” Ryan said.