A flood of foreign-made consumer and capital goods sharply boosted the… (Joe Raedle / Getty Images…)
Washington — For all the growth in domestic manufacturing and exports, the ballooning U.S. trade deficit continues to be a thorn in the side of the U.S. economy.
The Commerce Department said Thursday that the nation’s trade deficit widened to a larger-than-expected $51.8 billion in March, up from $45.4 billion in February. The U.S. posted record exports of $186.8 billion in March, but imports also hit a new monthly high of $238.6 billion.
Unlike in recent months, the jump in the deficit wasn’t mostly because of higher oil imports. Instead, a spike in overseas purchases of capital goods, such as computers and telecommunications equipment, and consumer products (including television sets and cell phones) accounted for the bulk of the fatter trade imbalance.
Rising imports aren’t all bad as they reflect growing domestic demand; American consumers have been spending – and borrowing -- more recently. And some of the imports are high-tech goods that were designed in the U.S. and assembled overseas with domestically produced parts.
Still, a rising trade deficit indicates more dollars are going overseas rather than returning to support production and jobs in the U.S. Analysts said Thursday’s report means that American economic output, or gross domestic product, was probably smaller in the first quarter than the government’s 2.2% preliminary estimate.
“Since the economic recovery began in June 2009, the trade deficit has doubled and GDP growth has averaged a disappointing 2.4% a year,” said Peter Morici, a University of Maryland professor and former chief economist at the U.S. International Trade Commission.
“Consumers are spending again - the process of winding down household debt that followed the Great Recession,” he wrote in an analysis of Thursday’s trade report. But “too many consumer dollars go abroad to purchase Middle East oil and Chinese consumer goods.”
Analysts see weaker import growth in coming months, but also a slowdown in exports, particularly to debt-troubled Europe and China. China’s trade data for April, released Thursday, showed decelerating growth year-over-year especially for imports, even as the Asian giant recorded an $18.4-billion trade surplus with the world for the month.
Diane Swonk, chief economist at Mesirow Financial in Chicago, said China’s latest trade figures “were not encouraging” as far as the U.S. is concerned.
“Moving forward,” she added in a research note, “much will depend on how we are affected by instability in Europe and concerns that China is heading for a hard instead of a soft landing.”
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