The U.S. trade deficit unexpectedly declined in March for a second consecutive month, something that hasn't happened in more than two years. The improvement reflected record U.S. exports and a big drop in the country's foreign oil bill.
The Commerce Department reported Friday that the gap between what the country sells abroad and what it imports narrowed to $62 billion in March, the smallest deficit in seven months. It was a 5.5 percent improvement from February's $65.6 billion deficit which in turn had fallen from the all-time high of $68.6 billion set in January.
The back-to-back improvement in the trade deficit, something that last happened in October-November 2003, was certain to be welcomed by President Bush, who is facing increasing election-year attacks from Democrats who contend that Bush's free trade policies have put the nation in hock to foreign governments and cost millions of manufacturing jobs at home.
The trade deficit through the first three months of this year, even with the two months of improvements, is running at an annual rate of $785 billion, up by 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.
Economists, who had been expecting the deficit would rise to around $67 billion in March, cautioned against looking for any sizable improvements in coming months, given that oil prices have jumped above $70 per barrel.
"The trend in the deficit has stabilized but it is not falling," said Ian Shepherdson, chief U.S. economist at High Frequency Economics, a private consulting firm.
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