There was no surprise in the March 2009 trade balance released by the Census Bureau on Tuesday. The deficit expanded to $27.6 billion in the month, following a nine-year low of $26.1 billion in February.
The deficit has been shrinking dramatically in recent months as oil prices plummeted from summer-highs and exports decreased as a result of weakening global demand. The slight expansion in the March deficit marks the first monthly increase since July.
“In our minds, the details of the report do not make us any more optimistic on the economic outlook,” said Joseph LaVorgna, chief U.S. economist at DeutscheBank.
Total exports shrank by $3.0 billion in the month to $123.6 billion, while imports saw their eighth consecutive drop with a $1.6 billion fall to $151.2 billion. The goods-deficit expanded $1.2 billion in the month to $38.4 billion, while the surplus in services shrank by $0.2 billion to $10.8 billion.
Oil prices also played a role in the expanding deficit, as the average price for a barrel of oil gained $2 in March to $41.36.
LaVorgna noted the only major exports to advance were in industrial supplies and foods & beverages, while capital goods, aircraft, autos, and consumer goods all registered declines.
The annual changes in the deficit are even more revealing: the trade balance has narrowed by 52% since March 2008, with exports declining 27% and imports plummeting 52%.
Looking forward, imports could fall even more, said Ian Pollick, economics strategist at TD Securities. "With a U.S. consumer ready to save more and spend less, this suggests that the decline in imports could fall by a larger amount going forward as continued economic uncertainty keeps household consumption at bay," he said.
In terms of GDP revisions, LoVorgna said the trade numbers are consistent with a first-quarter GDP of -5.5%, a milder figure than the -6.1% reported two weeks ago.
