-Millan Mulraine, an economist at TD Securities USA LLC
The U.S. trade deficit widened in April, from a more than three year low, reflecting an improvement in imports of consumer goods and business equipment, easing concerns about the degree of slowing in economic growth. A report from Commerce Department showed Tuesday that the gap grew by 8.5% to $40.3 billion compared with a $37.1 billion shortfall in March that was smaller than previously expected. In April shipments from the U.S. rose 1.2% to a seasonally adjusted $187.4 billion, while imports increased 2.4% to $227.7 billion. The report also showed that the gap with the second largest economy jumped to $24.1 billion from $17.9 billion, from the lowest level in three years recorded in March.
The widening trade deficit is expected to weigh on growth early in the second quarter, as trade subtracts 0.2% from the first-quarter economic output. During the first three months, the economy was hit by higher taxes and government spending cuts, which affected consumer spending and manufacturing activity. As strong exports helped to lift the U.S. economy out of the 2007-09 recession, the slowing global demand, especially in China and the Eurozone, are posing significant risks to the economic recovery.
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