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The U.S. Trade Deficit Unexpectedly Widens

The Commerce Department figures showed that the gap  widened by 7.7 percent to $42.3 billion, the biggest since September, from the prior month’s $39.3 billion, according to Bloomberg News. The U.S. trade deficit has unexpectedly widened as February shows the highest level in five months, as exports of fuels and of capital equipment both dropped.

Economic growth will become further depressed from this deterioration in trade in the first quarter and the slowdown in consumer spending has already been seen due to unusually harsh winter weather.

Economists polled by Reuters had forecast the trade deficit falling to $38.5 billion. In addition to weak exports, February’s rise in the deficit, according to Economic Times, likely reflected an increase in the price of crude oil.

The India Times Reported that, exports slipped 1.1 per cent to $190.4 billion in February. That was the lowest level since September. It has been reported that the decrease largely reflects a steep drop in exports of industrial supplies.

A U.S. economist at RBS Securities in Stamford, Connecticut, Guy Berger said that, “Trade is going to be a little bit of a drag for first-quarter growth,” beyond that Berger shares, according to Bloomberg News, “factors favor a gradual narrowing of the trade deficit. Exports will increase as many of the emerging markets are still expanding, and while Europe is not doing great, it is growing. Imports will rise as the economy gets better.” Excluding petroleum, the trade shortfall widened to $22.4 billion from $19.9 billion.

The European Central Bank has forecast that the 18-nation economy will grow 1.2 percent this year and 1.5 percent in 2015. NBC News reported that employers have added 204,000 new jobs to the payrolls last month, and according to a report by CNBC News, a report on Wednesday showed that private employers also stepped up hiring in March for a second straight month.

Image Credit: www.reuters.com

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