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Economy in Brief

U.S. Trade Deficit Posted Surprising Improvement
by Tom Moeller May 11, 2005

The U.S. foreign trade deficit improved unexpectedly in March to $55.0B from the little revised record of $60.6B in February. Consensus expectations had been for a $61.5B deficit.

Total exports jumped 1.5% following two months of little change. Goods exports surged 1.4% (6.9% y/y) on the strength of a 6.6% increase in foods, feeds & beverages and a 3.3% (4.7% y/y) rise in capital goods. Exports of advanced technology products jumped 31.3% (NSA, +2.9% y/y).

In other categories export performance paled. Exports of non-auto consumer goods were unchanged (9.8% y/y) after a 3.1% spike in February and automotive exports fell 1.2% (+7.0% y/y), down for the second month.

Services exports rose 1.8% (7.7% y/y) as passenger fares jumped 3.9% 14.5% y/y) and spending on travel surged 2.8% (10.8% y/y).

Total imports slumped 2.5% despite a 4.1% (32.4% y/y) rise in petroleum products. The average price of crude oil surged 11.6% to $41.14 per bbl. (34.3% y/y). Imports of non-petroleum goods fell 4.6% (+4.7% y/y) as capital goods imports fell 1.1% (+8.3% y/y) for the second monthly decline and nonauto consumer goods imports plunged 6.8% (+4.5% y/y).

The US trade deficit with China improved for the second month to $12.9B ($162.0B in 2004) as exports surged (-2.0% y/y) and imports fell (+17.4% y/y). The US trade deficit with Japan deepened further to $7.8B ($75.2B in 2004) but the monthly trade deficit with the Asian NICs nearly dissolved ($21.9B in 2004) due to a 22.1% surge in exports (3.8% y/y). The US trade deficit with the European Union deepened to $9.3B ($110.0B in 2004), the result of an 11.7% jump in imports (+1.0% y/y) which outpaced a 12.7% (4.8% y/y) rise in exports.

Are We Underestimating the Gains from Globalization for the United States? from the Federal Reserve Bank of New York is available here.

The Evolution and Implications of the U.S. Current Account Deficit from the Federal Reserve Bank of Atlanta can be found here.

Unwinding the Current Account Deficit from the Federal Reserve Bank of St. Louis can be viewed here.

Foreign Trade Mar Feb Y/Y 2004 2003 2002
Trade Deficit $55.0.0B $60.6B $47.1B (3/04) $617.1B $496.5B $421.7B
  Exports - Goods & Services 1.5% 0.2% 7.1% 12.4% 4.6% -3.1%
  Imports - Goods & Services -2.5% 1.5% 10.3% 16.3% 8.5% 2.1%
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