U.S. Trade Gap Widened in April

The U.S. trade deficit widened in April for a second month as exports dropped to the lowest level in almost three years, offering little sign of an end to the worst global recession in the post-World War II era.

The gap between imports and exports grew 2.2 percent to $29.2 billion, in line with forecasts, from a revised $28.5 billion in March that was larger than previously estimated, the Commerce Department said today in Washington. Foreign demand for U.S. goods dropped 2.3 percent, exceeding a decrease in imports.

Imports may rebound first in coming months as the U.S. economy begins to expand, while exports languish until a recovery takes hold among trading partners from Japan to Germany, widening the deficit further. That danger underscores Treasury Secretary Timothy Geithner’s call for other nations to implement stimulus and financial-rescue plans.

A growing gap means trade will not help the economy this year as much as in 2008, when it contributed the most to growth in three decades.

The drop in exports reflected reduced foreign demand for engines, machinery and metals. At $121.1 billion, the level of exports was the lowest since July 2006.

Exports to Japan dropped to the lowest level since 1994 and those to South and Central America were the weakest in two years, today’s report showed.

Imports decreased 1.4 percent to $150.3 billion, the fewest since September 2004. The drop was led by declines in purchases of fuel, other than crude oil, drilling equipment, computer accessories and toys from abroad.

Imports of crude oil rose as the price climbed to $46.60 a barrel from $41.36 in March, according to today’s report.

The politically sensitive trade gap with China increased to $16.8 billion from $15.6 billion in the prior month.

U.S. Trade Gap Widened in April

Tradingeconomics.com, Bloomberg
6/10/2009 8:56:08 AM