Trade deficit rises to $40.4 billion in March
Rising oil prices, along with an increase in oil imports, accounted for the largest U.S. trade deficit in 15 months, even as exports reached their highest levels since October 2008. But analysts warned that the Greek fiscal crisis could make existing growth projections for the rest of the year overly optimistic.
In figures released by the Commerce Department on Wednesday, the trade deficit rose 2.5%, from $39.4 billion in February to $40.4 billion in March. It was the largest monthly trade deficit since December 2008, and analysts said it was evidence of a rebounding U.S. economy. So far, the U.S. deficit is running at an annualized $467.2 billion, 23.4% higher than the $378.6 billion last year.
The deficit with China rose 2.4% in March to $16.9 billion, the highest level since January and the largest trade gap with any country. The deficit with the 27-nation European Union rose to $7.1 billion in March, a jump of 32.7%, while the deficit with Canada fell 15.8% to $2.3 billion and the imbalance with Mexico rose 26.7% to $6 billion.
Paul Dales, an economist with Capital Economics, said rising oil prices are “a natural appetite of households and businesses for imports as economic conditions improve.” Excluding petroleum, the deficit actually narrowed to $15.6 billion from $16.4 billion.
Overall, exports grew 3.2% to $147.9 billion, while imports were up 3.1% to $188.3 billion.
Economists warn the debt crisis in Greece — the reason the dollar appreciated 15% against the euro since December — could have an effect on U.S. export growth later in the year and into 2011.
“Slower growth in Europe will add to the effects of tighter policy in other areas, such as Asia, resulting in weaker global growth,” Dales said.
The signs could already be in place. March import figures were propelled by a 25.5% jump in crude oil shipments, which rose to $22.3 billion in March, the highest level since October 2008. The average price for a barrel of crude oil rose to $74.32 in March, up from $72.92 in February. But oil prices have been falling since prices hit $87.15 a barrel in early May, with prices dipping below $76 a barrel in trading Wednesday.
“Greece, a small economy, is not the major issue,” said Sung Won Sohn, an economist at Cal State Channel Islands in Camarillo. “The worry is that the contagion could spread to the rest of the continent.”
