The trade deficit narrowed more than expected in March according to a Commerce Department report released this morning. But the improvement didn’t come from a boom in exports, but rather from a slump in imports, as Americans cut back on everything from oil, to cars, to furniture. Import growth shrank to its lowest level since the recession in 2001, causing the trade gap to contract to $58.2 billion, below the $61 billion consensus. Exports shrank as well, falling 1.7% to $148.5 billion despite the continued weakness of the dollar. Bloomberg:
Americans bought fewer automobiles and less crude oil, furniture and communications equipment from overseas as the economy grew at the slowest pace since 2001. Exports fell for the first time in more than a year, indicating economies abroad may also be starting to cool.
The report did not reflect well on the health of the underlying economy given that it was largely based on imports falling more than exports,” said Russell Price, senior economist at H&R Block Financial Advisors in Detroit, who forecast a gap of $59 billion. A weaker dollar should still cause the shortfall to diminish further by fueling demand for U.S. products, he said.
As Europe and Japan begin to struggle and the dollar recovers slightly, its difficult to see exports growing at any appreciable rate.