The gap shrank 28 percent, the biggest drop since October 1996, to $26 billion from a revised $36.2 billion in January, the Commerce Department said today in Washington. Imports dropped 5.1 percent, leading to declines in the deficits with Japan and China, and exports climbed from a two-year low.
The smaller gap may cause economists to trim the projected drop in first-quarter economic growth as slowing demand by U.S. consumers and businesses hurts the nation’s trading partners even more than American factories. Still, shrinking economies in Europe and Asia will remain a drag on U.S. sales overseas, signaling the rebound in exports will be short-lived.
February’s gap was the smallest since November 1999. The trade gap with China decreased to $14.2 billion, the smallest in three years.
Imports fell to $152.7 billion, the fewest since September 2004. Demand for foreign-made cars slumped to the lowest level since October 1996, as purchases of Japanese cars were cut almost in half. The trade gap with Japan dropped to the lowest level since 1984.
American demand for consumer goods from abroad other than automobiles fell by $1.4 billion in February as purchases of toys, furniture, clothing, appliances and televisions all declined.
U.S. exports climbed 1.6 percent to $126.8 billion, as sales of pharmaceutical supplies, autos and telecommunications equipment improved, today’s report showed.
After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit dropped to $35.6 billion, the lowest level since May 2001.