U.S. Narrows Trade Gap to $62B in March

WASHINGTON -- For the first time in more than two years, the U.S. trade deficit has declined for two months in a row. The main reasons: record U.S. exports and a big drop in the country's foreign oil bill.

The trade gap narrowed to $62 billion in March, the smallest deficit in seven months, the Commerce Department reported Friday. It was down from a $65.6 billion imbalance in February and an all-time high of $68.6 billion in January.

It marked the first consecutive monthly improvements in the deficit since October-November 2003 and offered hope that the country's trade deficits, which have set records for four straight years, may be on the verge of improving.

But private economists, who had expected the March deficit would rise to $67 billion, cautioned that the change will not come overnight. They said the monthly deficit numbers were likely to worsen again in coming months, reflecting the recent surge in oil prices, before steady improvements start at the end of this year.

"Oil prices are likely to remain high and move up during the summer. But after that, we may see some sustained declines in the trade deficit," said Nariman Behravesh, chief economist at Global Insight, a private forecasting firm.

Wall Street suffered through a second straight day of steep losses as investors were rattled by a big plunge in consumer confidence and rising import prices, reflecting higher oil costs.

The Dow Jones industrial average lost 119.74 points to close at 11,380.99. The Dow had dropped 142 points on Thursday, the biggest one-day decline since a loss of 213 points on Jan. 19.

Through the first three months of this year, the trade deficit was still running at an annual rate of $785 billion, up 8.4 percent from last year's record high of $723.6 billion.

The politically charged deficit with China rose by 12.5 percent in March to $15.6 billion even though U.S. exports to China hit an all-time high, led by a big jump in sales of commercial airplanes.

The March deficit, the lowest monthly imbalance since a gap of $58.5 billion last August, reflected a 1.9 percent rise in U.S. exports of goods and services, which hit a record of $114.7 billion.

The increase in exports was attributed to stronger overseas growth, which has boosted demand for American exports, and a weaker dollar versus other currencies, which makes U.S. goods cheaper and more competitive on foreign markets.

In March, some of the biggest export gains were recorded for electric generators, industrial machinery, computers and farm products including corn and soybeans.