Trade Deficit Widens To $27.6 Billion

(AP)  The U.S. trade deficit rose in March for the first time since last July as the global recession cut sharply into sales of American exports. The politically sensitive deficit with China increased.

The Commerce Department said Tuesday the deficit widened to $27.6 billion in March, slightly lower than the $29 billion gap that economists had forecast.

The March deficit was 5.5 percent higher than February's revised $26.1 billion trade gap, which had been the smallest since November 1999.

Through the first three months of this year, the deficit is running at an annual rate of $359.7 billion, far below last year's $681.1 billion. Economists expect the deficit will remain at low levels this year as a recession in the U.S. crimps demand for foreign goods.

The global downturn also has cut into sales of U.S. exports. That will limit the amount of improvement seen in the deficit, which is the difference between what America imports and what it sells abroad. The slump in exports has been a blow to U.S. manufacturing giants such as Boeing Co. and Caterpillar Inc. who derive a large part of their sales from foreign markets.

For March, exports of goods and services fell 2.4 percent to $123.6 billion, the lowest level since August 2006. Sales of farm products dropped $2.4 billion, while exports of capital goods slid $1.7 billion, led by big declines in sales of civilian aircraft, telecommunications equipment, semiconductors, and domestic autos and auto parts.

Imports declined 1 percent to $151.2 billion, the lowest level since September 2004. Imports of capital goods dropped $516 million, led by declines in industrial machinery. The overall import level fell even though imports of oil rose 6.2 percent to $17.2 billion, the highest level since January.

The politically sensitive deficit with China rose 10 percent to $15.6 billion in March, the largest gap since January. China for more than a decade has been the country with the largest trade surplus with the U.S. The gap has triggered repeated calls in Congress for a crackdown on what critics see as unfair trade practices in China that also have resulted in the loss of millions of American manufacturing jobs.

China reported Tuesday that its global export sales fell 22.6 percent in April from the same month last year, fresh evidence that pain in the country's trade sector persists due to slumping global demand.

The Obama administration earlier this year said it will continue to hold high-level talks with China started by the Bush administration, although the frequency of the meetings was cut in half to once a year. The first meeting is scheduled for this summer in Washington.

With the U.S. recession expected to last until the second half of this year and the downturn in many other nations expected to drag into 2010, economists don't expect a significant rebound in trade anytime soon.

The hit to export sales has added to the wave of job layoffs in the U.S.

The Labor Department on Friday reported 539,000 net job losses in April. While still elevated, it was the lowest level in six months and below the 700,000 monthly average during the first quarter of this year.

Many economists believe the unemployment rate, which hit 8.9 percent in April, will climb to around 10 percent even if the recession ends and a recovery begins sometime this fall.

[gspencer4]

Economic value is created only when you grow something in the earth, extract something from the earth, or make (manufacture or construct) something that is consumable (or useful).

Transportation/distribution/warehousing/tax/sales/delivery/packaging costs are added to the value (cost) of the product that was initially created by these basic creative efforts. Printing new money to pay people for raking leaves, environmental cleanup, mortgage bailout, union retirements, TARP, business failures, and etc. to stimulate the economy just makes the existing money have less value and less buying power, but does nothing in the long run solution to the problem.

Industrious nations like China grow wealthy and secure by making enough products to support their needs on their farms, factories and mines, plus earn additional currency by creating additional wealth by exporting products that they manufactured. The health of every other business depends upon these productive industries.

[gspencer4]

Do you believe that the Chinese renminbi (aka yuan) will replace the US dollar as the world standard for international trade if the US government continues to borrow and then spend a lot of money (with the careless abandon of a drunken sailor on shore leave)?

This is very disturbing to those very same foreigners that the USA hopes will buy our freshly printed currencies (hopefully at not too much of a discount) to pay for our economic stimulation, our imported consumables, and our other government expenses. The discounts offered at public bid by manufacturing nations that have the dollars will depend upon the confidence that we instill these foreigners by our economic actions. Many countries are losing confidence in the dollar as the benchmark for world trade and currency values. Other currencies, like the Chinese Yuan with a more stable value, are now being talked about as a replacement for the US Dollar as the benchmark for international currency values.

Why does any foreigner with US dollars earned by making things for US consumers buy these freshly printed-paper US securities if they cannot be redeemed for gold? Because these printed-paper US securities can be redeemed by foreign entities for title to US real estate, farms, agri-businesses, food supplies, dairies, forests, industries, breweries, hotels, factories, casinos, financial institutions, retail businesses, and most other assets located in the USA, instead of redeeming these dollars for gold. Some US government sources estimate that the title to 25% of our assets with recorded deeds and titles are now listed as foreign owned (http://economyincrisis.org/articles/show/1072) and this percentage is increasing rapidly. Our payments to foreign oil and foreign raw material suppliers are handled in essentially this same manner.

[sjc_1]

Bush's illusion of prosperity since 9/11 was based on tax breaks for the rich and deficit spending. Once he got the war in Iraq going, there were plenty of no bid contracts for friends at Halliburton, Becktel and Blackwater, to name a few. This is what leads to misleading GDP numbers that look like growth.

They said the annual deficit was $250 billion when it was more than $500 billion per year, because they cooked the books and said items like Iraq were "Off Budget." Simple math tells you that you do not get a $5 trillion dollar addition to the debt by running $250 billion dollar deficits for 8 years. The debt accumulation would be half the $5 trillion that actually happened.

[omnibus66]

Trade deficit with China increases, and so does Wal-Marts sales and profits. Does Wal-Mart sell anything that is not made in China?

For the answer to this question and many more, be sure to tune in to todays Rush Limbaugh show. You will be amazed and enlightened. Your confidence in the Republican Party will be restored. It will be an orgasmic experience.

On the other hand, you could just stare at some pictures of Carrie Prejean.

[Ichabod09]

Looks like I have found a troll with the multiple IDs of:

Python
TruthisLife1
Informed1
Stuart2560

[cgillasp]

I don't understand. The last 2 years not a DROP of clean air. Did the government do this to force us to buy things? Is this the 'capitalist system' we have?? I NEED TO KNOW.

Isn't this system NOT WORKING???

I only pray for the speedy bankruptcy and dissolution of this morally bankrupt country as quickly as possible. WE ARE IN CHAINS---MERE SLAVES.

[credibility2]

Of course we all know that this is also the fault of Bush, right? Everything will continue being the fault of Bush while the new president cowers in his timeout corner giving more news conferences where he says nothing and does even less.

[inketolstoy]

With all the millions of jobs Obama has returning we should soon be making things, good people world wide will want and need! looking forward to it.
Posted by wtcmedic911 at 6:36 AM : May 12, 2009

Looking forward to it, yes. Counting on it, no. Sitting in my tent city eating potato and onion soup cooked by solar power. That is change that I believe in!

[budmag06]

Ever notice there is bad economic news everyday of incredible proportions? "a recovery begins sometime this fall" Yeh, right. Socialist policy is based on destruction, not recovery.

[sjc_1]

I can remember when the trade deficit was twice this amount, mostly due to high oil prices. You have to ask what the trade deficit has to do with the value of the dollar. It has a lot to do with it and to ignore it has long term consequences.