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U.S. Trade Deficit Spikes

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U.S. Trade Deficit Spikes

Economy

U.S. Trade Deficit Spikes

U.S. Trade Deficit Spikes

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New numbers out Tuesday show the monthly trade deficit jumped to $40 billion in December. A big jump in imports outstripped a robust expansion in exports. Both the rising demand for foreign goods and the greater sales overseas were considered signs of a return to health in the economy.

MICHELE NORRIS, host:

The nation's trade deficit widened in December to more than $40 billion. That's due in part to a nearly five percent jump in imports. Economists say the surge in demand for imported goods, especially oil, is a sign the U.S. economy is on the mend. Exports were also up, though not as sharply. The Obama administration wants to double exports in the next five years. Officials say that could create some two million jobs.

NPR's Scott Horsley reports.

SCOTT HORSLEY: Exports already support close to 10 million jobs in the U.S., many of them manufacturing jobs that pay better than average wages. But Commerce Secretary Gary Locke says that's not good enough.

Secretary GARY LOCKE (Department of Commerce): While the U.S. is a major exporter, we are, quite frankly, underperforming.

HORSLEY: Locke says most other major economies get a bigger boost from foreign sales. Here in the U.S., less than one in 100 companies does any business outside the country. The Commerce secretary says the rest are missing out on 95 percent of the world's potential customers.

Sec. LOCKE: America's strength has always been its people's ability to create and sell products and services that help others around the world.

HORSLEY: Roy Paulson believes that. He runs a company in Temecula, California that makes goggles, kneepads and other protective gear.

Mr. ROY PAULSON (CEO, Paulson Manufacturing): It's a family business. My father started the business.

HORSLEY: Paulson Manufacturing now employs about 150 people. And about a third of its products go to customers in China, Europe and the Middle East.

Mr. PAULSON: People want to buy American products. I don't have a problem selling in foreign markets.

HORSLEY: Paulson admits though, when he first ventured into the export market about five years ago, he was confused by things like licensing requirements and letters of credit. He was puzzled when he couldn't reach a customer in the Middle East, unaware that businesses there were closed for a religious holiday. What eventually helped Paulson navigate this unfamiliar territory was a network of trade specialists stationed around the world by the Commerce Department.

Mr. PAULSON: I basically was mentored and handheld through the process by them of developing my business to become successful at selling overseas.

HORSLEY: As part of its national export initiatives, the Obama administration wants to hire hundreds of additional trade specialists. Secretary Locke says most would be posted abroad to seek out new markets, distributors and customers for American firms.

Sec. LOCKE: Think of it as matchmaking or speed dating for exporters. We'll search and find partners and customers for you until you find the right fit.

HORSLEY: Business groups generally approve of the administration's moves, but some say they don't go far enough to meet the president's goal of doubling exports within five years. They want the president to sign more free trade agreements and pressure China to adjust its undervalued currency, making U.S. goods more competitive.

Roy Paulson would also like the government to relax export restrictions that make it hard for him to sell certain products like riot shields, which he says are readily available from competitors overseas.

Even with these challenges, though, Paulson says one of the best ways to close the trade deficit is simply to persuade more U.S. businesses to take the export plunge.

Mr. PAULSON: Fear is the biggest problem. They're unsure of the rules and regulations and so they just go in another direction, whereas the people are very hungry for our products in these other markets and it will be a way for us to bring back employment.

HORSLEY: Thanks to the growth of his own export sales, Paulson's planning to hire at least a dozen more workers in the next couple of months.

Scott Horsley, NPR News, Washington.

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