U.S. trade deficit balloons to six-year high

WASHINGTON – The U.S. trade deficit in March ballooned to the highest level in more than six years, propelled by a flood of imports from autos to cellphones.

The deficit rose to $51.4 billion, the largest trade gap since October 2008 and more than 43 percent higher than in February, the Commerce Department reported Tuesday. Exports were up 0.9 percent to $187.8 billion, while imports increased 7.7 percent to $239.2 billion. The trade deficit is the shortfall between exports and imports.

The result suggests that international trade played a major role in the U.S. economy’s anemic growth in the first quarter. It could even force the government to further revise down its gross domestic product estimate for the period, possibly into negative territory.

Paul Ashworth, chief U.S. economist at Capital Economics, said the massive trade deficit means the U.S. economy “undoubtedly contracted slightly in the first quarter.” He estimates GDP in the January-March period actually fell 0.3 percent instead of the 0.2 percent growth the government reported last week.

However, he noted the surge in imports stems largely from the resolution in February of a labor dispute at West Coast ports, which worked to clear their backlogs in March.

“Assuming that most of the catch-up is now complete … then imports should fall back in April, bringing the trade deficit down to a more normal level too,” Ashworth said.

Economists are looking for a bounce back in growth in the current April-June quarter to around 2 percent, climbing to a 3 percent average in the second half of the year. Rising employment is expected to fuel stronger consumer spending, which should help offset sluggish export growth.

Exports have been hurt by an increase in the value of the dollar against other major currencies over the past year. A strong dollar makes U.S. products more expensive overseas while lowering the price of imported products.