March 2008 Trade Figures: U.S. deficit plunges
There’s a silver lining to the normally negative reports coming out of the media about the U.S. economy. Thanks to surging exports (part of the result of a weak dollar) and lower demand for imports, the U.S. trade deficit plummeted in March, the “…biggest percentage drop since December 2001….”
The trade gap shrank to $58.2 billion in March, down 5.7 percent from a revised estimate of $61.7 billion in February. Wall Street analysts had expected the March gap to narrow to $61.3 billion.
A $6.1 billion drop in the value of imports to $206.7 billion was the biggest on record. It was also the biggest percentage drop since December 2001, only months after the attacks on the United States and when the U.S. economy was in a downturn.
In a sign that the current U.S. economic slowdown is taking a toll on consumer and business demand, major import categories like autos and auto parts, industrial supplies and materials, consumer goods and capital goods all showed declines in March.
And how about them exports?
U.S. exports retreated in March, but were still the second highest on record at $148.5 billion. Auto exports showed the biggest decline, followed by industrial supplies and materials and consumer goods.
Before the March decline, U.S. exports had set records in 12 consecutive months – helping to keep the U.S. economy afloat during a time of turmoil brought on by a housing slump and spreading liquidity crisis.
The closely-watched U.S. trade deficit with China narrowed to $16.1 billion in March, the lowest in two years as U.S. exports to that country grew 10 percent to their second highest on record.
Emphasis ours. As I mentioned a couple of months ago, in 2007 China rose past Japan to become our third largest export market thanks to an 18.1% increase in export value (compared to 11.1% increase in import value). And as I mentioned almost 2 years ago, U.S. exports to China more than doubled over the five year period from 2001-2005.
Hat tip to World Trade magazine.
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