Trade Deficit at Record $19.7 Billion in March
The U.S. trade deficit hit a record $19.7 billion in March--the third record in a row--as imports of goods and services into the booming U.S. market hit the highest levels ever, the government said Thursday.
Government officials and economists said record deficits were likely to continue as long as the economy stays strong while Europe, Asia and the rest of the world remain weak.
During the first quarter, the trade deficit grew to $55.7 billion, compared with $35.4 billion a year ago, with about 40% of the increase due to higher imports of automobiles and parts, the Commerce Department said.
U.S. exports of goods and services also rose in March, reflecting improving economic conditions in Asia, but the increase was not enough to offset record imports into the booming American market, where consumer demand is strong. Wall Street economists had expected a slight decline in the deficit to $18.5 billion from February’s record $19.15 billion.
U.S. imports rose to a record $97.22 billion in March from $95.95 billion in February, while exports rose to $77.52 billion from $76.80 billion.
The increase in March imports reflected higher crude oil prices as the volume of crude oil imports fell to 8.5 million barrels per day from 8.8 million barrels in February, but the average price rose to $10.43 per barrel from $9.46.
Steel imports were up in March to 2.6 million metric tons from 2 million metric tons in February, the department said. But preliminary data on politically sensitive steel imports showed that increase being reversed in April.
The U.S. trade gap with Japan jumped to $6.49 billion from $5.27 billion in February, the biggest gap since October 1994, as U.S. exports rose slightly but imports jumped.
The deficit with Mexico rose to a record $2.53 billion in March from $2.01 billion in February, while the gap with Canada widened to $2.41 billion in March from $2.25 billion.
Federal Reserve Chairman Alan Greenspan said the rising deficit was disturbing but of no immediate danger to the U.S. economy because of the current level of strong growth.
“It is an issue which does disturb me, has disturbed me for years because I know that . . . the long-term equilibrium is working against us,” Greenspan told the House Banking Committee. “There is no evidence that there is any immediate problem coming because of the fact that we are as an economy growing far faster than the rest of the world.”
Greenspan and outgoing Treasury Secretary Robert Rubin, in joint testimony, also told the House panel that reforming the world financial system was an arduous task and warned there was no quick fix.
The nation’s top two economic policymakers offered few fresh ideas, instead reiterating their familiar credo that sound economic policies are ultimately the only way of restoring stability to the global economy.
Greenspan was not asked during his appearance about the Fed’s announcement on Tuesday that the central bank had changed its policy bias toward raising interest rates.
Separately, the Labor Department said the number of Americans filing for first-time jobless claims fell 12,000 last week to a seasonally adjusted 299,000, a sign workers are having few problems finding jobs.
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Trade Deficit
The overall gap continues to reflect a deficit in the trade of goods and a surplus in services. In billions of dollars:
March: -$19.7 billion
Source: Commerce Department
