US trade deficit at highest in over 6 years
Print Edition
THE US trade deficit in March ballooned to the highest level in more than six years, propelled by a flood of imports from autos to cellphones.
The deficit rose to US$51.4 billion, the largest trade gap since October 2008 and more than 43 percent higher than in February, the Commerce Department said yesterday. Exports rose 0.9 percent to US$187.8 billion, while imports jumped 7.7 percent to US$239.2 billion.
The result suggests that international trade played a major role in the US economy’s anemic growth in the first quarter. It could even force the government to further revise down its gross domestic product estimate for the period, possibly into negative territory.
Paul Ashworth, chief US economist at Capital Economics, said the massive trade deficit means the US economy “undoubtedly contracted slightly in the first quarter.” He estimates gross domestic product in the first quarter actually fell 0.3 percent instead of the 0.2 percent growth the government reported last week.
However, he notes that the surge in imports stems largely from the resolution in February of a labor dispute at West Coast ports, which worked to clear their backlogs in March.
“Assuming that most of the catch-up is now complete ... then imports should fall back in April, bringing the trade deficit down to a more normal level too,” Ashworth said in a note to clients.
Economists are looking for a bounce back in growth in the current April-June quarter to around 2 percent, climbing to a 3 percent average in the second half of the year. Rising employment is expected to fuel stronger consumer spending, which should help offset sluggish export growth.
Exports have been hurt by an increase in the value of the dollar against other major currencies over the past year. A strong dollar makes US products more expensive overseas while lowering the price of imported products and making them more competitive in the US market.
The jump in imports in March reflected increased shipments of foreign-made industrial machinery, autos, mobile phones, clothing and furniture.
For the first three months of this year, the trade deficit was 5.2 percent higher than the same period a year ago. A larger trade deficit acts as a drag on growth because it means more US producers are losing sales to foreign competitors.
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