NEW YORK (CNN/Money) - The U.S. trade deficit widened in January, the government said Tuesday, a report that pointed to a recovery in domestic demand for goods even as global economic weakness dragged on first-quarter U.S. economic growth.
The Commerce Department said the gap between U.S. exports and imports swelled to $28.52 billion from a revised $24.71 billion in December. Economists surveyed by Briefing.com had expected a trade gap of $27.2 billion.
"We're seeing on an almost daily basis signs across all sectors that this recovery is for real, and this trade number is confirmation of that," Wayne Ayers, chief economist at Fleet Boston Financial, told CNNfn's Before Hours program. "We've seen a pick-up in imports, indicative that the economy has turned the corner."
Imports and exports are both components of gross domestic product (GDP), the broadest measure of the nation's economy. Though a rise in imports in January points to higher demand for goods and services, imports also detract from GDP. Total imports rose to $104.7 billion in January from $102.8 billion in December.
Exports, on the other hand, add to total GDP, and they performed dismally in January, dragged down by continued weakness in overseas economies. Total exports fell to $78 billion in January from $78.04 billion in December as the value of exported goods tumbled to the lowest level since March 1999. Service exports edged higher.
"This decline in exports is consistent with other data indicating that economic activity in most foreign countries remained weak at the start of the year," said Wachovia Securities economist Jay Bryson.
U.S. stock prices were slightly higher in early trading. Treasury bond prices and the dollar were little changed.
U.S. exporters want the government to make an effort to reduce the value of the dollar, saying a strong dollar has hurt their ability to compete in overseas markets. The government, on the other hand, has kept the dollar higher in part because it makes imports cheaper and helps control inflation.
The deficit with China was the largest, surging to $6.86 billion in January from $5.49 billion in December. The gap with Japan shrank to $4.75 billion from $5.02 billion in December. The gap with Canada rose to $4.43 billion from $3.83 billion in December. The gap with the European Union rose to $4.63 billion from $3.95 billion in December.
The report comes on the same day Federal Reserve policy makers meet to discuss monetary policy. The central bank is widely expected to leave its target for short-term interest rates, already at a 40-year low, unchanged and to say the risks to the economy were evenly balanced between economic weakness and a risk of inflation.
Fed Chairman Alan Greenspan and many other economists believe the United States is recovering from its first recession in a decade, which likely began in March 2001. The economy did avoid two straight quarters of shrinking GDP, however -- it shrank in the third quarter, but expanded in the fourth -- meaning the common definition of a recession was avoided.
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