U.S. trade deficit widens in April for the second straight month

Posted Jun 10th 2009 11:40AM by Connie Madon
Filed under: International Markets, Economic Data

How do we know that world trade is loosening up? One indication is the U.S. trade deficit. Unfortunately the U.S. has been running a growing trade deficit for the past two months. You may be asking, what causes our trade deficit? The U.S. trade deficit is caused by importing more goods than we export. In April the trade gap widened by 2.4% from March to $29.2 billion. This follows a 10-year low in February.

The trade gap narrowed by 53% from a year ago when world trade collapsed from the global recession. The slight gains in the past two months indicate that some improvement is occurring in world commerce.

Much of the increase came from the price of oil, which is now trading near $70 per barrel. In April, exports fell by 2.3% to $121 billion on declining demand for industrial goods, capital goods, cars, parts, and engines. Imports fell by 1.4% in April to $150.3 billion. There is still much caution due to rising unemployment and a high savings rate that rose to 5.7%

The United States continues to import from China, up to $16 billion from $15 billion. The U.S. deficit with the European Union grew to $5.3 billion, up from $4.4 billion, and the gap with Mexico widened to $4 billion from $3.9 billion.

What does all of this mean? Well, we are seeing a pinch of increased trade, but keep in mind that our trade gap has fallen 53% from a year.ago. This would indicate that we have a long way to go to even say that things are getting back to normal.

Do you believe that world trade will improve for the rest of the year?

Tags: China, EU, inthenews, Mexico, oil prices, trade deficit, trade gap

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Reader Comments (Page 1 of 1)

6-10-2009 @ 2:29PM

R. C. Jackman said...

Gee, I wish we could talk about a trade surplus, just at least once in a while to balance the books. If we have a lot of layoffs, then our export is diminished. If we borrow and print money, then our currency is inflated and the value of our export is diminished. It's not looking good. I think current economic practices need to be re-evaluated.