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The U.S. trade deficit widened much more than expected in January as higher oil prices and surging imports of capital goods and cars overpowered record exports in a signal of strengthening domestic demand.
The trade gap grew by 15.1 percent to $46.3 billion from $40.3 billion in December, the Commerce Department said on Thursday. Analysts had expected a deficit of $41.5 billion.
The shortfall in trade with China, a sore point in bilateral relations, grew 12.5 percent to $23.3 billion.
With more domestic demand being sated by overseas production, some economists said they would likely reduce their forecasts for first-quarter U.S. economic growth by about a half percentage point to around a 3 percent annual rate.
Anthony Chan, chief economist for private wealth management at JPMorgan in New York said that pace would be "barely enough" to make headway in reducing unemployment. "We obviously would make a lot more progress at 3.5 percent," he said.
A second report from the Labor Department showed new claims for jobless benefits rose 26,000 last week to 397,000. While economists had looked for a smaller increase, they said the gain was not enough to suggest the labor market recovery was running off the rails.
The rise in claims, fears of unrest in top oil producer Saudi Arabia and a ratings agency downgrade of Spain pushed U.S. stocks lower. The Dow Jones industrial average dropped the most in seven months, while Treasury debt prices rose. The dollar rose against the euro and the yen.
Oil prices shot up in January as economic recovery in the United States and the rest of the world picked up steam. Prices jumped significantly more last month on political turmoil in North Africa and the Middle East. On Thursday, benchmark Brent crude closed at $115.43 a barrel.
A related surge in U.S. gasoline prices has helped undermine public confidence in the way the country is going, posing a fresh challenge to President Barack Obama. A Reuters/IPSOS poll on Wednesday showed 64 percent of those surveyed believe the country was on the wrong track, up seven points from February.
Reports on Friday are expected to show gasoline prices helped lift U.S. retail sales by 1 percent in February, while pulling down consumer sentiment this month.
The Fed's policy-setting panel is likely to nod to higher commodity prices in a statement after a meeting on Tuesday, but analysts feel officials will not see a grave enough threat to either growth or inflation to alter policy.
The trade gap grew by 15.1 percent to $46.3 billion from $40.3 billion in December, the Commerce Department said on Thursday. Analysts had expected a deficit of $41.5 billion.
The shortfall in trade with China, a sore point in bilateral relations, grew 12.5 percent to $23.3 billion.
With more domestic demand being sated by overseas production, some economists said they would likely reduce their forecasts for first-quarter U.S. economic growth by about a half percentage point to around a 3 percent annual rate.
Anthony Chan, chief economist for private wealth management at JPMorgan in New York said that pace would be "barely enough" to make headway in reducing unemployment. "We obviously would make a lot more progress at 3.5 percent," he said.
A second report from the Labor Department showed new claims for jobless benefits rose 26,000 last week to 397,000. While economists had looked for a smaller increase, they said the gain was not enough to suggest the labor market recovery was running off the rails.
The rise in claims, fears of unrest in top oil producer Saudi Arabia and a ratings agency downgrade of Spain pushed U.S. stocks lower. The Dow Jones industrial average dropped the most in seven months, while Treasury debt prices rose. The dollar rose against the euro and the yen.
Oil prices shot up in January as economic recovery in the United States and the rest of the world picked up steam. Prices jumped significantly more last month on political turmoil in North Africa and the Middle East. On Thursday, benchmark Brent crude closed at $115.43 a barrel.
A related surge in U.S. gasoline prices has helped undermine public confidence in the way the country is going, posing a fresh challenge to President Barack Obama. A Reuters/IPSOS poll on Wednesday showed 64 percent of those surveyed believe the country was on the wrong track, up seven points from February.
Reports on Friday are expected to show gasoline prices helped lift U.S. retail sales by 1 percent in February, while pulling down consumer sentiment this month.
The Fed's policy-setting panel is likely to nod to higher commodity prices in a statement after a meeting on Tuesday, but analysts feel officials will not see a grave enough threat to either growth or inflation to alter policy.