WASHINGTON (AP) - The U.S. trade deficit declined sharply in April as exports posted a modest gain and imports fell, raising hopes that trade will not be as big a drag on economic growth in the current quarter.
WASHINGTON (AP) — The U.S. trade deficit declined sharply in April as exports posted a modest gain and imports fell, raising hopes that trade will not be as big a drag on economic growth in the current quarter.
The April deficit dropped 19.2 percent to $40.9 billion after surging to $50.6 billion in March, the Commerce Department said Wednesday. The March deficit had been the highest level since late 2008.
The big surge in the deficit reduced overall economic growth by nearly 2 percentage points in the first quarter, helping send the gross domestic product down at an annual rate of 0.7 percent.
In April, exports edged up 1 percent to $189.9 billion, led by a big rise in commercial airplane sales. Imports fell 3.3 percent to $230.8 billion. The deficit is the difference between imports and exports.
The big deficit increase in March reflected the end of a labor dispute which had tied up West Coast ports. With the ports fully operational, a backlog of imports, many from China, flooded into the country. Economists had predicted with the backlog processed, the deficit would shrink in April to more normal levels.
For the first four months of the year, the deficit is running 1 percent higher than the same period a year ago. Economists believe this year's deficit will increase modestly from the revised $508.3 billion deficit in 2014, slightly reducing overall growth.
American manufacturers have been hurt by a rise in the value of the dollar over the past year. The stronger dollar makes American goods more expensive on overseas markets and makes imports cheaper for U.S. consumers.
But a boom in U.S. energy production has helped to lower the trade deficit, reducing Americans' reliance on foreign oil. In April, the petroleum deficit shrank to $6.8 billion, the lowest level in 13 years.
On top of the trade deficit, the economy ran in to other headwinds in the first quarter, including a severe winter which slowed economic activity. There was also a sharp cutback in capital expenditures by U.S. energy companies as the price of oil plunged.
But economists are looking for growth to recover in the current quarter, expecting the overall economy, as measured by the gross domestic product, to expand at a rate of around 2.5 percent, helped by healthy job gains. New jobs should boost spending by Americans while some of the adverse effects that held back growth at the beginning of the year fade in the April-June period.
President Barack Obama is lobbying Congress for the power to negotiate major trade agreements under expedited procedures that would require an up or down vote without amendments by lawmakers. The 12-nation Trans-Pacific trade deal would include countries like Chile, Vietnam and Japan.
Obama and backers of the trade deal argue that it would open huge markets to U.S. goods by lowering tariffs and other trade barriers. But critics, including labor and environmental groups, say that the trade agreement would subject American workers to unfair competition from countries with lower standards for both labor rights and environmental protections.
The Senate has approved the fast-track proposal but it faces heavy Democratic opposition in the House.