Trade Deficit in the U.S. Probably Widened on Higher Oil Prices
The U.S. trade deficit probably widened in April for a second month as imports climbed because of higher oil costs, economists said before a report today.
The gap increased to $29 billion from $27.6 billion in March, according to the median forecast of 73 economists surveyed by Bloomberg News. The shortfall reached a nine-year low of $26.1 billion in February.
Imports may keep rising as consumer spending stabilizes and the U.S. emerges from the worst economic slump in half a century, signaling the trade deficit will expand further in coming months. A growing gap means trade will not help the economy this year as much as in 2008, when it made its biggest contribution to growth in three decades.
“The headlong declines in global trade activity appear to be coming to an end,” said Brian Bethune, chief U.S. financial economist at IHS Global Insight in Lexington, Massachusetts. “The rest of the world still looks weak, so we do not expect the U.S. recovery to be export-led.”
The Commerce Department will issue the report at 8:30 a.m. in Washington. Economists’ estimates ranged from deficits of $26 billion to $31.5 billion.
Higher fuel costs will probably keep boosting the import bill. A barrel of crude oil on the New York Mercantile Exchange in April cost an average $49.95, up from $48.11 in March. Prices touched a seven-month high of $70.32 on June 5.
Trade’s Contribution
A narrowing of the gap prevented the economy from contracting even more last year individual health insurance. Trade contributed 1.4 percentage points to growth in 2008, the most since 1980.
The boost continued this year. The economy shrank at a 5.7 percent annual rate in the first quarter, even as trade made a positive contribution of 2.2 percentage points.
An improvement in trade will likely come too late to help global growth. The International Monetary Fund in April said the world economy will shrink 1.3 percent this year and a recovery may take place in the first half of next year. It predicted a 1.9 percent expansion for all of 2010.
Some regions are faring better than others. China’s economy may expand 7.5 percent this year, according to the median forecast in a Bloomberg survey. Still, the government cautioned this month that a recovery isn’t yet solid.
Japan’s deepest postwar recession is easing, according to the government’s broadest measure of economic health released this week.
For some companies, overseas sales are helping cushion weakness elsewhere. Texas Instruments Inc., the second-largest U.S. semiconductor maker, raised its second-quarter sales and profit forecasts this week as customers slowed the pace of inventory reductions and demand improved in Asia.
Filed under: management by Finance Boss