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U.S. trade gap shrinks
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June 21, 2001: 10:06 a.m. ET
Falling April exports raise GDP concerns; jobless claims surprisingly low
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NEW YORK (CNNfn) - The U.S. trade deficit fell in April, the government said Thursday, but the drop followed a record-setting gain in March and still was higher than forecasts by Wall Street economists.
The nation's trade deficit shrank to $32.2 billion in April from a revised $33.1 billion in March, the Commerce Department reported. Economists polled by Briefing.com had expected a deficit of $30.9 billion.
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It does appear that the export situation continues to get worse, and this will act as a drag on economic activity.
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Kevin Logan
Senior market economist,
Dresdner Kleinwort Wasserstein |
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Separately, new jobless claims fell to 400,000 last week from a revised 434,000 the prior week, the Labor Department said, versus Wall Street forecasts for 425,000.
A drag on GDP?
U.S. exports fell to $86.9 billion from $88.7 billion in March. Exported goods fell to $62.1 billion from $63.9 billion in March, while exported services were little changed. Meanwhile, imports also fell, to $119.1 billion from $121.8 billion in March.
The March trade gap previously was reported at about $31.2 billion, and resulted from the biggest one-month gain since the Commerce Department started keeping track of it in 1992. Economists had hoped the trade gap would improve this year as the slowing U.S. economy hurts what has been strong demand by Americans for products made abroad.
"It's a bit difficult to interpret the data because of revisions," said Kevin Logan, senior market economist with Dresdner Kleinwort Wasserstein. "It does appear that the export situation continues to get worse. Imports are flattening out, but exports are decreasing. And this will act as a drag on economic activity."
Some economists immediately began trimming their outlook for the final first-quarter U.S. gross domestic product number, which the Commerce Department is expected to release June 29.
After issuing a preliminary GDP growth rate estimate of 2.0 percent April 27, the Commerce Department slashed that number to 1.3 percent on May 25, just a week after reporting surprising weakness in March export data.
After Thursday's trade deficit was released, some economists who said they'd expected the big trade gap said their GDP estimates would not change. But others said GDP could be revised below 1 percent, and one economist even said GDP could fall into negative territory.
"What we take away as significant is a slightly bigger drag on first-quarter GDP as a result of the revision to March and starting off the second quarter with lackluster trade, which would exert a higher drag on GDP," said Jeoff Hall, chief U.S. economist with Thomson International Financing Review.
Jobless claims surprisingly low
The slowing U.S. economy has cut into corporate profits and led to hundreds of thousands of layoffs in 2001, making Thursday's lower-than-expected jobless claims data especially surprising.
Anthony Crescenzi, bond market strategist with Miller Tabak & Co., told CNNfn's Before Hours program that, while the claims data were better than expected this month, the trend appeared to be toward flat job growth, which would lead to a higher jobless rate over time, as the work force increases. (429K WAV) or (430K AIF)
The Federal Reserve likely will take all these data into account when it meets June 26 and 27 to discuss cutting interest rates for the sixth time in 2001 to boost the sagging U.S. economy.
U.S. stocks were little changed in early trading, as any optimism spurred by the jobless data was offset by concerns about corporate profits. Meanwhile, U.S. Treasury bond prices rose in anticipation the Fed will cut rates again. 
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Trade deficit report
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