Trade deficit largest since ’08 as imports surge after ports dispute
People sit on the sand in Sunset Beach near the ports of Long Beach and Los Angeles during the West Coast ports dispute in February. The ports slowdown was a key factor in the U.S. first quarter economic contraction, which has pulled down the International Monetary Fund’s forecast for global growth forecast this year.
The U.S. trade deficit widened in March to its largest gap since 2008 as a surge of imports flooded into the country after a labor agreement resolved the West Coast ports dispute that had delayed shipments.
The gap between imports and exports expanded to $51.4 billion, up from $35.9 billion in February, the Commerce Department said Tuesday.
With February’s reduced off-loading in shipping, that month’s deficit was the lowest since 2009.
The 43% month-to-month increase in the trade deficit was the largest since 1996 and was much bigger than economists had forecast. The last time the deficit was wider was October 2008, near the depths of the Great Recession.
The new data could mean the government will report the economy contracted in the first quarter of the year when it updates last week’s initial growth estimate at the end of the month.
Imports reduce domestic economic growth while exports add to it.
A $17.1-billion jump in imports in March to $239.2 billion caused the larger trade deficit. Exports rose $1.6 billion to $187.8 billion.
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FOR THE RECORD
10:57 a.m.: An earlier version of this article stated that the trade deficit widened last month to its largest point since 2008. The figure is for March. The earlier version also said exports jumped $17.1 billion in March. The increase was for imports.
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Imports had declined sharply in January and February as many container ships were delayed in unloading their cargo because of a labor dispute at the ports of Los Angeles and Long Beach as well as elsewhere on the West Coast.
The dispute ended in late February, and Southern California port officials said it could take up to three months to clear the backlog.
The rising value of the dollar against other currencies also helped widen the trade deficit, making imports less expensive and increasing the cost to foreigners for U.S. products.
March’s increase in imports was larger than government officials had assumed in their initial estimate that the economy expanded at a weak 0.2% annual growth from January through March, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Given Thursday’s data, he said, the economy probably contracted in the first quarter.
Even so, Shepherdson cautioned, the trade deficit in March was “a massive outlier.” The deficit “will drop sharply as exports recover and imports revert to trend,” he said.
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