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US Trade Imbalance Surges to post-Recession High

Published by: Kelly Curtis on 5th May 2015 | View all blogs by Kelly Curtis

US Trade Imbalance Surges to post-Recession High

The US Commerce Department reported Tuesday that the nation's trade deficit reached its highest level since the recession as a resolution was found to a labor standoff. Negotiations over a new labor contract for unionized longshoreman have been ongoing for months as billions of dollars in imports have sat on the docks at Los Angeles and Long Beach, the two US ports that handle the most imported goods. March's massive jump was essentially a recovery from the prior month, when the trade gap plummeted to a six year low. Both fluctuations were anomalies caused by the labor stoppage and the resulting delays in processing imports. According to the Commerce report, US imports rose 7.7 percent last month, easily a record for one-month growth in the category.

While March's trade gap increase can partially be explained by the halt in flow of imports, that didn't stop some economists from expressing alarm. At $54.1 billion, last month's deficit was the highest since 1996, and over 18 percent above the consensus estimate of a group of economists that took part in a recent Bloomberg survey. The report also suggests that the government's report of 0.2 percent GDP growth in the first quarter may have been inflated, as a larger trade gap would mean lower GDP. There were other economists that were less shaken by Tuesday's report, citing the three month average for the trade imbalance, which rose more modestly.

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