March 13 (Bloomberg) -- U.S. imports and exports both slumped for a sixth straight month in January in what may be the biggest collapse of world trade since the 1930s, raising the threat of protectionist measures to shield domestic industries. The U.S. trade deficit narrowed in January to $36 billion, the lowest level in six years, on tumbling American demand for everything from OPEC oil to Japanese automobiles, Commerce Department figures showed today in Washington. The Labor Department said prices of imported goods dropped for a seventh month in February, another byproduct of the global recession.American exports have slumped at a 44 percent annual pace in the most recent six months of data, with imports shrinking 51 percent, probably the most since the Great Depression, according to Morgan Stanley analysts. The figures may add to pressure on the Obama administration to rework international agreements and include protections for U.S. workers and the environment.
“The global volume of trade has collapsed,” said Christopher Low, chief economist at FTN Financial in New York in an interview with Bloomberg Television. “When you add protectionism on top of that, that further reduces both the volume of trade and also efficiencies. It tends to hurt both sides.”
The U.S. trade deficit has narrowed as imports fall faster than exports. American consumers are reining in spending as the unemployment rate surges and household wealth evaporates at a record pace. Consumer confidence remained near a 28-year low in March, a private report showed today. The Reuters/University of Michigan preliminary index of consumer sentiment was at 56.6 in March, compared with 56.3 in February. The gauge reached 55.3 in November, the lowest level since 1980.
The trade gap with China increased to $20.6 billion from $19.9 billion in the prior month as U.S. exports to the nation dropped faster than imports. China has used some of the dollars it gets from trade surpluses with the U.S. to buy American government debt, making it the largest owner of Treasuries.