U.S. trade gap widens sharply in January

WASHINGTON (MarketWatch) � The U.S. trade deficit widened sharply in January, driven higher by record imports of autos, capital goods and food, government data showed Friday.

The trade gap expanded 4.3% in January to $52.6 billion from $50.4 billion in December, the Commerce Department said.

This is the largest monthly differential between imports and exports since October 2008 and came in much bigger than had been expected.

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Analysts surveyed by MarketWatch had anticipated that the deficit would widen but just slightly so, to $49.0 billion. The December deficit was revised from its prior estimate of $48.8 billion. See MarketWatch�s comprehensive economic calendar.

The higher December deficit will subtract from economic growth in the final three months of the year, now estimated at a 3.0% rate for expansion in gross domestic product.

For all of 2011, the nation�s trade deficit totaled a revised $560 billion, compared with the prior estimate of $558 billion.

The trade report could also lower expectations for first-quarter GDP growth: Before the report, the consensus of economists surveyed by MarketWatch had been that growth for the first three months of the year would decelerate to a 1.9% annual rate.

After the data were released, economists at Goldman Sachs cut their estimate for first-quarter GDP to 1.8% growth from a previous estimate of a 2% rate.

Analysts at J.P. Morgan Chase also reduced their first-quarter forecast, to 1.5% GDP growth from the 2% previously projected.

Economists are worried that the U.S. will once again become the only engine of growth for the world economy.

�The U.S. will suck in goods from abroad while others don�t grow and U.S. exporters will face stagnant conditions overseas, stymieing efforts to make inroads,� said Robert Brusca, chief economist at FAO Economics, in a note to clients.

But Bob Baur, chief global economist at Principal Global Investors, noted that the trade deficit is only 3.7% of U.S. GDP, well below the peak of 5.6% in 2006.

�I don�t see [the trade deficit] going back to 6% of GDP,� especially with a new trend of companies relocating plants back in the U.S. from China, Baur said in an interview. T

The U.S. trade deficit with the European Union bumped up to $8.5 billion in January from $5.6 billion a year ago.

Economists believe a recession in Europe will mean that U.S. exports may struggle in 2012. At the same time, Europe will seek to send more exports to the U.S.