Trade deficit widens despite record exports

Record-high exports weren't enough to narrow the nation's deficit that was hampered by rising oil prices and a growing demand for foreign cars. 

The January trade deficit increased 15.1 percent, the largest in six months, to $46.3 billion, as imports grew at their fastest pace in 18 years, the Commerce Department said Thursday. The trade gap in December was up $40.3 billion. 

Meanwhile, exports rose 2.7 percent to an all-time high of $167.7 billion, ahead of the previous record of $165.7 billion in July 2008, but were overshadowed by a rise in imports to $214.1 billion, with cars and industrial machinery driving the increase. 

Autos, industrial machinery, medical equipment and farm products helped provide the export boost. 

Commerce Secretary Gary Locke focused on the record export number, as the Obama administration presses to double exports by 2015. 

"We've now seen private-sector job growth for 12 straight months, and increasing U.S. exports play a key role in that," Locke said in a statement. 

While economists expect this year's trade gap will run close to 2010, if the deficit continued to run at this pace, and oil prices continue to climb, the imbalance would be pushed up to $556.1 billion from last year's $495.7 billion, which was 32.8 percent higher than in 2009 during the recession.

Surging oil prices increased the U.S. bill by 9.5 percent to $34.9 billion, the highest level since October 2008, as concerns grow over the effects of rising gas prices on the fragile economic recovery. 

The trade deficit with China accounted for about half the overall shortfall, rising to $23.3 billion from $20.7 billion in December.

Meanwhile, China reported a deficit of $7.3 billion in February, a surprise that isn't expected to become a trend for the nation that typically runs trade surpluses with nations around the world. 

The U.S. deficit with Canada dropped down to 4.9 percent to $3.7 billion, the imbalance with the European Union dropped 15.3 percent to $5.6 billion and the deficit dropped 15.6 percent to $5 billion with Japan.