A surge in imports caused the US to record its biggest monthly trade deficit since the 2008 global financial crisis in March, prompting economists to say the economy probably contracted in the first three months of the year.
The politically sensitive goods and services deficit rose to $ 51.4bn in March, up 41 per cent from the $ 35.9bn recorded in February. Exports rose by 0.9 per cent to $ 187.8bn. But that increase was eclipsed by a 7.7 per cent growth in imports to $ 239.2bn thanks to growing demand for cars, mobile phones and furniture.
The figures were awkward for US policy makers. The impact of a strong dollar on US exports has already been blamed for contributing to slowing growth in the first quarter, in which the US economy grew at an annual rate of just 0.2 per cent.
Paul Ashworth, chief US economist at Capital Economics, said: "The March trade data will require a downward revision to first-quarter GDP. The second estimate will show a decline rather than a 0.2 per cent annualised increase, but it will be a pretty modest contraction of roughly 0.3 per cent."
That the US economy fared even worse than initially thought in the first quarter will build on the case for the Federal Reserve to delay raising its policy rate as part of an effort to normalise monetary policy.
The data released on Tuesday were also awkward politically for President Barack Obama, who has pushed trade to the front of his economic agenda despite criticism from many members of his own Democratic party.
Congress is now considering whether to grant the president the "fast-track" authority he needs to conclude a massive Pacific Rim trade agreement with Japan and 10 other economies. Opponents of the Trans-Pacific Partnership contend past trade agreements have led to ballooning deficits and an exodus of jobs overseas.
The latest data showed the US trade deficit with China, which is not in the TPP, increased $ 10.5bn to $ 37.8bn in March with imports rising by $ 10.9bn to $ 47.1bn.
The deficit with Japan, the other big player in the TPP talks, increased to $ 6.3bn in March thanks to a $ 2.2bn surge in imports.
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