December 3, 2023

Trade Deficit Narrows as Exports Increase

The gap between exports and imports shrank to $43 billion in February, down 3.4 percent from a revised $44.5 billion in January, the Commerce Department said on Friday. It was the smallest trade imbalance since December, when the gap had declined to $38.1 billion, the lowest point in nearly three years.

Exports rose 0.8 percent, to $186 billion, close to the record set in December. Stronger exports of energy products and autos offset declines in sales of airplanes and farm equipment.

Imports were flat at $228.9 billion, with the volume of crude oil falling to the lowest point since March 1996.

The deficit with China shrank to $23.4 billion, the lowest point in 11 months. Exports to the European Union were down 0.9 percent in February, compared with January.

Through the first two months of this year, the United States deficit is running at an annual rate of $524.5 billion, down slightly from the $539.5 billion imbalance last year.

Economists expect the deficit this year will narrow slightly, in part because of continued gains in energy exports. A narrower trade gap lifts growth because it means American companies are earning more from overseas sales while domestic consumers and businesses are spending less on foreign products.

The economy as measured by the gross domestic product grew at an annual rate of 0.4 percent in the October-December quarter. Economists say they believe economic growth strengthened in the January-March quarter to around 3 percent.

In addition to increases in energy exports, economists are hopeful that exports of other products will rise this year as well, helped by stronger growth in some major export markets.

That forecast is based on an assumption that the European debt crisis will stabilize, helping lift exports to that region, and that growth in Asia will rebound further. The outlook for Europe has been clouded recently by problems in Cyprus and new worries that the debt troubles could destabilize more countries.

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