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WASHINGTON
- The U.S. trade deficit narrowed sharply in March as demand
for imports fell by the largest amount since the last
recession was ending.
The
Commerce Department reported Friday that the deficit totaled
$58.2 billion, down 5.6 percent from February, a larger
improvement than had been expected.
The
smaller deficit reflected spreading weakness in the U.S.
economy, which cut demand for imports by 2.9 percent, the
largest one-month decline since December 2001, one month
after the last recession ended.
The
decline, which pushed imports down to $206.7 billion, was
led by a 5.9 percent decrease in America's foreign oil bill.
The amount of petroleum fell as the average price for crude
oil jumped to an all-time high. Imports of autos and a wide
variety of other consumer goods from furniture to toys and
clothing also fell, reflecting the hard economic times
facing U.S. consumers.
Exports,
which have been one of the few strong points in this period
of weakness, suffered a setback in March, falling to $148.5
billion, still the second highest level on record but down
1.7 percent from the all-time high set in February. Sales of
commercial airliners, cars, computers and machinery were all
down.
The big
improvement in the March deficit was expected to prompt the
government to revise upward its estimate for economic growth
for the first three months of the year. Ian Shepherdson,
chief economist at High Frequency Economics, said he
expected economic growth to be revised to a rate of 1.1
percent in the first three months of this year, well above
the government's initial estimate last week that the economy
grew at a barely discernible 0.6 percent rate during the
first quarter.
The
politically sensitive deficit with China dropped by 12.4
percent to $16.1 billion, the smallest level in two years,
as U.S. exports to China climbed to the second highest level
on record, led by sales of medical testing equipment and
computer chips. At the same time, imports of Chinese
products dropped sharply, reflecting lower demand for
cloths, textiles and toys.
Trade has
become a key debating point in this year's election
campaigns. Republicans including Sen. John McCain contend
that President Bush's free trade policies have expanded
opportunities for U.S. exports while Democrats contend that
Bush has not done enough to protect American workers from
unfair foreign competition.
The
president last month sent Congress a free trade agreement
with Colombia but its consideration has been blocked by
House Speaker Nancy Pelosi who says the deal cannot be
approved until the administration reaches agreement with
Democrats on policies to soften the economic blows being
suffered by Americans.
For the
first two three months of this year, the trade deficit is
running at an annual rate of $715.5 billion, up slightly
from last year's imbalance of $708.5 billion, which had been
the first decline after the deficit set records for five
consecutive years.
Economists
believe that the deficit will decline this year and that
exports will continue to benefit from a weaker dollar and
imports will fall, reflecting the weak U.S. economy, which
many analysts believe has already fallen into a recession.
For March,
the deficit with Canada, America's biggest trading partner,
edged up 0.4 percent to $6.5 billion, while the deficit with
the European Union rose by 9.1 percent to $7.5 billion even
though U.S. exports to the EU edged up 1.2 percent to a
record $24.1 billion. This reflected the boost that American
products have gotten as the U.S. dollar fell to a record low
against the euro.
The
deficit with Japan rose 8.9 percent to $7.5 billion while
the imbalance with the Organization of Petroleum Exporting
Countries totaled $14.1 billion, an increase of 6.8 percent
from February.
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