Big Deficit Drop Comes Out of Nowhere
The U.S. trade deficit unexpectedly dropped in March the most it has in over three years, reaching $55.0 billion. Two big factors in this huge drop were a record number of exports and a decline in Chinese imports.
The trade gap sat at $60.6 billion in February and Wall Street analysts expected it to reach about $61.2 billion in March. The 9.2% decrease was largely unexpected.
The analysts predicted high oil prices and a large amount of chinese textile imports to push the deficit up further, but obviously that was not the case. Chinese imports fell by 21.2%.
“Imports of all goods and services fell 2.5 percent in March, the biggest drop since December 2001, to a three-month low of $157.2 billion. Exports rose 1.5 percent to $102.2 billion,” says Bloomberg News. “The dollar’s decline in the past year may help explain why exports of capital goods rose 3.4 percent in March to $29.1 billion and exports of consumer goods climbed a record $9.5 billion.”
American consumers spent less money on automobiles as well as textiles and electronics in March. This certainly had an impact on the deficit as well. The deficit might have narrowed even more if it wasn’t for those darned oil prices.
The number of barrels of crude imported into the U.S. jumped from 296.9 million in February to 326 million in March. The average price per barrel in March was $41.14.