The U.S. trade deficit declined sharply in April as exports posted a modest gain and imports fell, raising hopes that trade's drag on economic growth will ease in the current quarter.

The April deficit tumbled 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, sending gross domestic product into negative territory.

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.

Robert Kavcic, senior economist at BMO Capital Markets, said he believed trade's impact would be roughly neutral in the current April-June period and would likely trim growth by about a half percentage point for the entire year.

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.

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.

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved