The deficit in the broadest measure of U.S. trade rose in the first quarter to the highest point in more than a year as rising global oil prices and a rebounding economy pushed up imports sharply, AP reported. The Commerce Department said Thursday that the deficit in the current account increased to $109 billion in the January-March period, compared to a revised $100.9 billion in the fourth quarter of last year. The current account deficit narrowed to $378.4 billion in 2009, down a sharp 43.4 percent from the 2008 deficit of $668.9 billion. The big drop reflected a deep recession in the United States, which cut demand for imported goods. But with the U.S. economy recovering, analysts believe the trade deficit will increase this year. The 8 percent increase in the first quarter deficit marked the third straight quarterly increase in the deficit, which now stands at the highest point since the final three months of 2008. The current account is the broadest measure of foreign trade because it measures not only trade in goods and services, which are tracked by the government on a monthly basis, but also investment flows between countries. The figure is watched closely by economists because it is a measure of how much the United States must borrow from foreigners to finance its balance of payments imbalance. In the first quarter, exports of U.S. products rose by 5.2 percent, reflecting gains in sales of chemicals and heavy machinery and equipment. However, imports of foreign goods increased faster, rising by 6 percent, with much of this increase reflecting a larger foreign oil bill. Manufacturing has been the standout performer so far in the recovery as U.S. companies benefit not only from rising domestic demand, but increased global sales. But the worry is that the European debt crisis and the rising value of the dollar could undercut further export gains. The 2009 deficit represented 2.7 percent of the total economy as measured by the gross domestic product, the lowest level since 1998. The current account deficit hit a high of 6 percent of GDP in 2006. -- SPA
