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Article History WASHINGTON (Map, News) - The U.S. trade deficit narrowed sharply in March as demand for imports fell by the largest amount since the last recession was ending. Analysts forecast that trade would continue to be one of the economy's few bright spots this year.
The March deficit totaled $58.2 billion, down 5.7 percent from February, the Commerce Department reported Friday. It was a much larger improvement than had been expected.
The smaller deficit was driven by a 2.9 percent drop in imports, which reflected widespread weakness in demand as consumers, battered by a severe housing slump, a credit crisis and soaring gasoline prices, cut back on their purchases of both domestic goods and imports. It marked the biggest one-month decline in imports since December 2001, when the country was struggling to emerge from the last recession.
Many analysts believe the country has fallen into another recession, although the better-than-expected trade performance prompted some economists to project that growth will be revised up from the barely discernible 0.6 percent rate reported last week to a slightly more respectable 1.1 percent rate for the first three months of this year.
That could mean the country will be able to avoid a full-blown downturn, although growth at that level would still be viewed as a so-called growth recession in which the economy does not expand fast enough to prevent unemployment from rising.
Mark Zandi, chief economist at Moody's Economy.com, said he still believed the current slowdown would be ruled a recession because growth will dip into negative territory in the current quarter.
"I still believe this is a recession and I think ultimately at the end of the day, it will be labeled as one," he said. He said, however, that export growth will continue to cushion the drag from housing and other weak sectors.
On Wall Street, stocks ended the week with a big decline as investors grappled with continued turmoil in the credit market and surging energy prices. The Dow Jones industrial average fell 120.90 points Friday to close at 12,745.88.
Imports totaled $206.7 billion in March, down $6.1 billion from the February level, a drop led by a 5.9 percent decrease in America's foreign oil bill. The amount of petroleum shipped into the country declined although the average price for a barrel of imported crude shot up to a record $89.85. With oil prices climbing this week to a new trading high above $126 per barrel, the March dip in oil imports was expected to be temporary.
Exports, which have been one of the few strong points in this period of weakness, dipped 1.7 percent in March to $148.5 billion, but that was still the second-highest level on record. For the first three months of this year, exports were up 17.6 percent over the same period a year ago.
Exports have supported half of the growth that has occurred in the economy over the past year and that is expected to continue as American farmers and manufacturers keep benefiting from a weaker dollar, which makes their goods cheaper on overseas markets.
"Exports are the strongest part of the U.S. economy," said Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers.
The politically sensitive deficit with China dropped by 12.4 percent to $16.1 billion in March, the smallest level in two years, as U.S. exports to China climbed to the second highest level on record, led by sales of medical testing equipment and computer chips. At the same time, imports of Chinese products dropped sharply, reflecting lower demand for clothes, textiles and toys.
Last year, the deficit dropped to $708.5 billion, the first improvement after five straight years of record highs, and economists forecast further improvement this year. Administration critics contend the deficits remain at debilitating levels and since Bush took office have contributed to the loss of more than 3 million manufacturing jobs. They say the Bush administration is failing to protect American workers from unfair foreign trade practices such as China's currency policies.
Democrats hope to make trade an issue in the upcoming battles for the White House and control of Congress. But Commerce Secretary Carlos Gutierrez said Friday that the high level of U.S. exports showed the Democrats' decision to block a vote on a free trade deal with Colombia was shortsighted.
He said the administration still hoped to win approval of free trade deals with Colombia, Panama and South Korea before Bush leaves office. House Speaker Nancy Pelosi, D-Calif., has said lawmakers will not take up the Colombia deal until the administration signals a willingness to go farther in addressing Americans' economic needs.
"We don't like this idea of using an ally as a bargaining chip," Gutierrez said in an interview with The Associated Press, predicting that the economy will receive a boost as the first of 130 million economic stimulus payments make their way to U.S. households.
The Treasury Department reported Friday that since the Internal Revenue Service began making direct deposits on April 28 followed with mass check mailings this week, 29.9 million payments have been made totaling $27.2 billion.
Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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Examiner Reader said:
if bush could bamboozel us on the war, why cant he bamboozel us on drilling oil in the us and setting up oil derricks in every fat cat gated community?
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Joe from Hayward said:
Once again the media types don't get it. The economy itself isn't that bad in terms of unemployment figures. The problem is INFLATION, which always hurts people on fixed incomes. In this case, it's related to the rising costs of fuel and food, primarily due to our ass-backwards energy policies. We can blame both the Republicans and Democrats for this one - the Republicans for pushing the ethanol program that is diverting farm production into making fuel (a rather inefficient method) and the Democrats for fighting all efforts to drill in ANWR, where we could be producing 1 million barrels of oil a day.
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Examiner Reader said:
"if china and india are to blame for all the problems,then lets quit dealing with them!" - We can't quite dealing with the rest of the world anymore than we can go back to living in caves. The issue here is to recognize that we can't dismiss the rest of the world and pretend that we are the only economic game in town. Standards of living in those countries are rising, those people want nice stuff like we do, and in the case of oil and gasoline, they are willing to pay as much as we are, if not more. Demand for fuel is rising, so if we want to keep prices stable, we need to increase the supply. We have plenty of oil under the ground, and our technology to extract in in a method that minimizes the impact to the environment has improved greatly over the last 20 years. Time to deal with reality, and stop this insane opposition to drilling in ANWR.
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Future VA Resident said:
11:14, please name me 1 policy which will help our economy. And I'm sorry but "change, real change...change you can believe in" doesn't count as a policy. His promise, along with Hillary, to end "Bush's tax cuts for the rich" will cost a single taxpayer making 30k a year will now pay 8400/year in federal tax vs the current 4500/year they pay under the current system....is that going to help the economy? As anyone who took an economics 101 class, 5% unemployment is considered full employment b/c there are always folks in between jobs. Housing Crisis? how about the 95% of people who are paying for their homes? Lets keep things in perspective, the economy isn't great but it isn't that bad either. Ask your friends in Germany or France how 14-18% unemployment feels. I'm sick of hearing all the folks bash the economy as if it's terrible, really it isn't that bad. My home is worth considerably more than it was 5 years ago, i've got a job that pays, have food, it's not that
2 agree | 2 disagree
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Vote it away then... said:
Vote Obama, end all this for the better of America. Read his policies, very smart and real solutions.
1 agree | 3 disagree
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Permian Basin said:
We are fortunately seeing the opposite trends in West Texas. The economy and housing market in the Permian Basin both continue to to show strong, steady growth. At a low 3%, the Midland-Odessa, Texas area currently posts the lowest unemployment rate in the state of Texas. Demand for workers is high, and the economic outlook is bright!
3 agree | 3 disagree
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Examiner Reader said:
how do the bean counters count 0.6 % i guess b s ers can get that low. wonder what happens when it goes below zero. but that wont happen with the top moneteryaticianist (bush) in total charge of our lives.
4 agree | 5 disagree
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Examiner Reader said:
funny how the amount of foreign crap purchased means more than what the public thinks about its loozer politicians and destroying other countries in the name of GOD.
6 agree | 5 disagree
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Examiner Reader said:
move over mr herbert hoover,the ones in charge now are the kings of destruction.
4 agree | 7 disagree
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Examiner Reader said:
and it only took two bush's and a clinton to get us to this point. that's cheap at twice the price when you consider we got several wars to go with it.
7 agree | 6 disagree
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Examiner Reader said:
being in the building trades isnt a sure fire to get rich.the money is made by the suits,dictating the price.the suits are from city planners to the banks and everyone shuffling paper in between.
7 agree | 6 disagree
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Examiner Reader said:
i hope the bottom keeps falling out of the houseing markett mabe the houses that have been way over priced for years will actually sell for what they are worth instead of filling the money grabbers pocketts with money,all houses have been way over priced for years but people kept buying them and money grabbers kept going up on the price of them till they priced there self out of the markett people are not buying them now,so what are the ones selling the houses doing now crying oh were being hit hard we cant sellum ,booooooo hooooooooo heres a thought try selling them for what they are worth for a change and quit ripping people off,mabe one day even the poor people can buy a home,if sellers quit chargeing 3 times what they are worth and they will if people quit buying them,they will drop the price or set onum till the end of time.
7 agree | 7 disagree
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Examiner Reader said:
if china and india are to blame for all the problems,then lets quit dealing with them!this is like paying your neighbor to come over and beat the s--t out of you every day.but i guess if your are a neocon and your wallets getting fatter everyday its ok.
6 agree | 6 disagree
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Examiner Reader said:
it just keeps getting better for the neocons!
6 agree | 7 disagree
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Mike said:
We have more than enough oil,gas and coal reserves right under our noses here in the U.S. It is the answer to all of our economic problems right now. Bush's biggest liability is not that he is some "big oil fatcat", as some delusional Democrats believe, but that he has not advocated for massive domestic energy supply and production. Sadly, he has recently jumped on the "global warming" bandwagon which is the biggest scam ever perpetrated on the U.S./World. If any one has caused food and energy costs to rise uncontrollably, it is Al Gore and his Eco-Nazi hoaxers, the U.S. Congress, along with their lobbyists, and now George Bush.
10 agree | 4 disagree
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Examiner Reader said:
welcome to the "one world fiasco". how does .50 cents an hour set with you. gonna make a 100.00 circular saw, a rich mans toy. thanks georgie and your neocmmie buddies, for making america a third world country.
6 agree | 5 disagree
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Examiner Reader said:
Energy prices are screaming upward because the demand for oil exceeds the supply available for refining. While China and India are pushing up prices due to their increased consumption, we refuse to drill for oil that is readily available (North Slope, offshore), refuse to build more nuclear power plants that would relieve the demand for fossil fuels, and instead push boondoggles like ethanol that are NOT efficient, but instead drive up the cost of corn and related food products. We are such geniuses when it comes to an energy policy...
7 agree | 6 disagree
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Examiner Reader said:
from 9:50 correction; excuse me but in the last post.(gorhring) was wrong. should have read joseph goebbels as he was the minister of enlightenment during hitlers reign. at any i'll bet they are both giddy as hell that they set todays standards for media reporting.
7 agree | 7 disagree
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Examiner Reader said:
its day to day now, but wait, the news is bound to contradict itself on an hourly basis in the very near future. bet old gorhing is spinning in his grave in envy!
7 agree | 8 disagree
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Examiner Reader said:
our loss of jobs is chinas gain.another gold star for the bush's and clintons. just think of all they can have when we go bust. your vote for either party is a win for them.
9 agree | 8 disagree
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Examiner Reader said:
the so called financial wizards should get out in the street to see what its like in the real world. these university educated morons are about a year behind in their assesments.but, iguess its all normal and going to neocommie plan to destroy america.
7 agree | 9 disagree
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Examiner Reader said:
we should bar bush from coming back into the country.
9 agree | 8 disagree
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Examiner Reader said:
we always have a recession during a repub administration. so what else is new????????? i know lets all relive the late 20's and early 30's thems were good times for usins.
7 agree | 7 disagree
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Examiner Reader said:
if i were bush id stay out of the country, and it amazes me that so many people voted for him,twice. but i guess thats a sign of yhe nations intelligence level.
7 agree | 8 disagree
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Examiner Reader said:
god, i hope the chinese dont go broke to.without them, who will support our war machine?
8 agree | 8 disagree
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Examiner Reader said:
im wondering if the mexican govt will allow the immigrants back into mexico,since theres no work for them here.we dont need pickers any more since the corporate farmers are growing govt subsidized ethanol now. we have machines to squeez that juice so no need for hands on workers
8 agree | 8 disagree
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Examiner Reader said:
thanks mr bush.i gues you did the best you could seeing as how youve had dysfunctional hirees in your cabinet for your terms. wait a minute who hired these guys in the first place?
8 agree | 7 disagree
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Examiner Reader said:
theres sure alot of people that arn't going to get paid. thats too bad! im sure that when olde john gets elected the defense industry will pick up and everything will be peaches and cream like the last seven years.
7 agree | 9 disagree
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Examiner Reader said:
now all those immigrants that risked their butts to get here are realising that this aint the promised land after all.tank out the economy and that solves the immigration problem.and it didnt even have to go thru the half assed congress or thru our dysfunctional pres.for veto. now they can give themselves a raise and us the finger.
8 agree | 8 disagree
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Examiner Reader said:
i think your are reffering to that loud sucking sound that mr perot brought up during his campaign. our govt has made foreign terrorism obsolete. we have elected our own terrorists since carter.
8 agree | 9 disagree
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Examiner Reader said:
this country has been on a down hill fall sence nafta and the china trade bills, those bills opened the door and all our jobs walked right threw it.
9 agree | 9 disagree
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Examiner Reader said:
way over priced houses and greedy lenders billons poured into the sand for a war, free trade, out sourced jobs,way over priced fuel that in turn leads to alot higher food bills top that with illegal immagration that puts a drain on our social services,then figure in half of the people in this country dont have medical insurence if they get sick they lose everything they have, then watch our leaders in goverment come on tv and say oh are economy is just in a slight down turn if they truly belieave that then we the people are in seriouse trouble.
10 agree | 9 disagree
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Examiner Reader said:
why should america produce anything when we can buy it from china cheaper on credit?we have to keep corporate america and offshore accounts viable. so BUY IMPORTS!
8 agree | 9 disagree
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Examiner Reader said:
the economy is going according to neocom plan.its the way to destroy a country with out firing a shot.
47 agree | 50 disagree
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Albert Franklin said:
If the Treasury reports a multitrillion dollar surplus annually from the stock market, then what do they not report collected annually from world markets, and why is this not calculated in the dollar?
70 agree | 75 disagree
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Examiner Reader said:
can any of you genius' tell me where these factories are located. im guessing they are in foreign slaver countries.after the gov. pays corps to relocate out of the good ole u s a.
74 agree | 88 disagree
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Examiner Reader said:
not to worry, the sub prime mess,the economy,homebuilding,and the crappy in debt economy will take care of the illegal immigration problem. now if we could just find oil and grow poppies in our back yards the iraq and afganistan wars would end.
78 agree | 99 disagree
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Examiner Reader said:
what we need is another bulls*#t war.or better yet martial law,where you are forced to go out and spend at the point of a gun.come on dicky,oil up your shotgun!
92 agree | 109 disagree
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Examiner Reader said:
next big crisis will be the illegal immigrant unemployment in the building trades.do you think one of the pres. candidates like hillary will be able to get them unemployment insurance since their high roller employer didn't pay into it. even china is hurting, not being able to pedal us all the "knock off" accoutriments that are being used in new housing.
133 agree | 95 disagree
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Examiner Reader said:
sure is a pleasure to watch AWOLS and rayguns economic policys working out so well.come on over to the cave a have a bite of shoe with us,next time your in town!we're doing great,and thanks again,guys.oh,and thank ole wolfie for the war for me.
93 agree | 93 disagree
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Examiner Reader said:
yeh 8:34 lets build a refinery in your back yard and you'll be picketing out there with the rest of the so called socialist.where were you at the meetings to counter the socialists. you guys are all alike,you bellyache about your pig out lifestyle thats coming to an end.how about bitching about the time of day too.
108 agree | 87 disagree
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Examiner reader said:
More economic nonsense from hate Bush socialist idiots. Look in the mirror. You voted for energy policies that blocked exploration, development, building, and refinement of additional energy. Now you are paying the price. Higher energy prices beget higher production costs. These production costs are now working their way through the economy. It was your "green" anti-energy voting pattern that caused this problem, not Bush. Politicians just respond to voter stupidity.
90 agree | 79 disagree
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Examiner Reader said:
up 7.4% way to go! george has taught us well!
148 agree | 127 disagree
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Examiner Reader said:
with nov u.s. factory orders up,it would be interesting to know in what country these factorys are located. u.s. factories in this day and age seem to be planted anywhere theres a population of slave labor.one worldism and slavery will evolve us backward,and hopefully we will land in a time before the father of trilatralism,who was that good ole boy peanut jimmy.remember,folks that " neo" means new, and con means thats what we been---CONNED! barnum was right!
105 agree | 124 disagree
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Reader said:
BostonRay, come out from your rock. Have you missed out on the failing of Bush and his COngress buddies the past 8 years. Oh, and it seems that Republican were in office in most years that the USA was losing money.....how odd you missed that...or are you just repeating old untrue GOP talk radio nonsense. Seems like it.
100 agree | 109 disagree
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Examiner Reader said:
is the whitehouse planning a giant celebration for the completion of 80 years of dumbs**tology.pretty sure ther was a republican in charge in 1928.save all those worn out chinese made shoes,as my dad said they boil up real good and with a little salt and pepper, its a fine meal!hit dont go nowhere any mor pa kin we et in the suv?
108 agree | 107 disagree
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A. Healy said:
You keep refering to a posible 08 recession. I think you had better change that to depression. It will all happen when China's meteoric growth bubble suddenly, without warning, has a meltdown taking the world's inflated economies with it.
100 agree | 97 disagree
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Examiner Reader said:
to boston ray