U.S. trade deficit widens in March
America's trade deficit grew in March by a smaller-than-expected amount, according to figures released on Tuesday.
The U.S. Department of Commerce said that in the third month of the year American consumers and businesses bought $27.6 billion US more in goods and services from foreigners than these same groups purchased from other nations.
As a result, March's deficit was $1.5 billion higher than the U.S. shortfall in February.
Still, the most recent monthly figure was better than the $29 billion gap economists had expected.
Generally, nations want to sell more goods and services abroad than they purchase from other countries. If a country, however, faces a long-standing deficiency in its trade balance, the national currency often depreciates in turn.
In the case of the United States, overseas investors sometimes ignore the balance trade and instead buy U.S. dollars even in the face of the persistent trade deficit.
Slumping sign
In March, U.S. exports to other countries fell by 2.4 per cent, sliding to $123.6 billion. That was the lowest level for American foreign sales since August 2006.
In turn, Americans purchased $151.2 billion worth of products from other countries, a drop of one per cent.
Thus, the U.S. trade gap widened because foreign demand for American goods and services fell by a greater percentage than did imports.
| U.S. trade balance | US ($) billion | |
| '08 | -681.1 | |
| '07 | -700.3 | |
| '06 | -753.3 | |
| '05 | - 711.6 | |
| Source: U.S. Department of Commerce | ||
That situation continued to indicate a global economy where trade is shrinking, not expanding.
During a recovery, countries such as the United States also might run trade deficits. In that case, however, the growing shortfall is a result of U.S. demand for foreign goods growing at a quicker clip than its exports.
Such a situation would still produce a widening trade deficit but because of increasing — not shrinking — global trade.
For example, the U.S. annual trade deficit hit $753.3 billion in 2006, more than 10 per cent larger than the shortfall in 2008.
Yet, the U.S. economy was growing in 2006 and had headed into a recession by the end of 2008.