U.S. goods trade gap narrows in April as exports outpace imports
A stronger export performance in April reduces the U.S. goods trade deficit and offers a potential tailwind for second-quarter economic growth. The narrower gap follows a first quarter in which trade weighs on gross domestic product, even as the economy continues to expand.
Highlights
- U.S. goods trade deficit narrows 3.4% to $82.4 billion in April, beating the $86.5 billion forecast from economists surveyed by Reuters.
- Goods exports rise by $8.5 billion to $219.7 billion in April, while imports climb $5.6 billion to $302.1 billion, shrinking the trade gap.
- A narrower April goods deficit, if sustained, could boost second-quarter GDP after the first-quarter trade gap subtracted 1.25 percentage points from growth.
April trade data and export momentum
As reported by the Commerce Department's Census Bureau, the U.S. goods trade deficit narrows 3.4% to $82.4 billion in April from the prior month. That comes in below economists' forecast of an $86.5 billion goods trade deficit in a Reuters poll.Goods exports increase by $8.5 billion to $219.7 billion in April, while goods imports rise by $5.6 billion to $302.1 billion. The larger gain in exports more than offsets the increase in imports, leading to the smaller trade gap.
Implications for second-quarter growth
If the April trend is sustained, trade could contribute to U.S. economic growth in the second quarter. The latest data suggests an improvement from the first quarter, when the trade deficit subtracts 1.25 percentage points from gross domestic product.The economy grows at a 1.6% annualized rate in the first quarter after expanding at a 0.5% pace in the October-December quarter. A narrower goods deficit could ease one of the drags on overall output in the current quarter.
Our earlier article on the constraints facing central banks’ inflation fight explained how aging populations and weaker public finances can limit the effectiveness of conventional interest-rate policy. We noted that rising fiscal pressures may increase the risk of “fiscal dominance,” making it harder for central banks to tighten policy enough to bring inflation back to target and potentially requiring alternative tools or closer fiscal-monetary coordination.
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