2002 trade gap sets record; wholesale prices surge

www.fortwayne.com Posted on Thu, Feb. 20, 2003 From staff, wire reports

WASHINGTON - The United States recorded a $435.2 billion trade deficit for 2002, the largest imbalance in history, as the weak global economy set back American exports while imports of autos and other consumer goods were hitting all-time highs.

Even in agricultural products, normally a U.S. bulwark, Americans bought more imported wine, cheese and other foods than American farmers were able to sell abroad - resulting in only the second U.S. trade deficit in agricultural products on record.

In another report released today, sharply higher energy prices and increased auto prices pushed wholesale prices up sharply in January.

The Commerce Department reported today the trade deficit for all of last year was up 21.5 percent from the $358.3 billion trade gap recorded in 2001 and surpassed the old record deficit of $378.7 billion set in 2000.

By country, the United States ran up the largest trade gap with China, a deficit of $103.1 billion, marking the third straight year that the United States has recorded its largest trade deficit with that nation. It pushed the former front-runner in this category, Japan, into second place.

In addition to the record for all of 2002, the United States set a new monthly high of $44.2 billion in December, up 10.5 percent from the previous record set in November of $40.0 billion.

The Labor Department reported inflation at the wholesale level shot up a sharp 1.6 percent in January, led by a huge 4.8 percent surge in energy prices.

Excluding the often volatile energy and food prices, wholesale inflation was up 0.9 percent.

January's increases followed declines of 0.1 percent in the overall index and 0.5 percent in the core rate in December.

Most of the increase in energy prices came from gasoline, up 13.7 percent in January after declining 1.2 percent in December. Fears over a war with Iraq and a general strike which cut production in Venezuela, a key oil supplier, drove up oil prices during the month.

Prices for passenger cars and light trucks rose 3.5 percent, as manufacturers cut back on incentive programs. Those prices had fallen 2.1 percent in December.

Wholesale food prices rose 1.6 percent in January, after a 0.4 percent gain in December, mostly because of an 18.2 percent increase for vegetable prices.

In a third report, the government said the number of newly laid off workers filing unemployment claims jumped to a seven-week high of 402,000 last week.