U.S. Trade Deficit Narrows to $50.1 Billion in April

By MARTIN CRUTSINGER

WASHINGTON -- The U.S. trade deficit shrunk in April, but only because a big drop in imports offset the first decline in U.S. exports in five months.

The Commerce Department says the trade deficit narrowed 4.9% in April to $50.1 billion.

U.S. exports, which had hit a record the previous month, fell 0.8% to $182.9 billion. Sales of everything from commercial jetliners to industrial machinery declined.

Imports, which also set a record in March, dropped an even faster 1.7% to $233 billion.

The trade gap remains wide and could therefore weigh on growth in the April-June quarter. A wider trade gap slows growth because it means the United States is spending more on foreign-made products than it is taking in from sales of U.S.-made goods.

And the slip in exports is troublesome because it shows the weaker global economy is dampening demand for American-made goods. Export sales declined to Europe, China and Brazil.

Europe's debt crisis has worsened in recent months and many economists say the region is already in recession. Europe accounts for almost one-fifth of U.S. exports.

• <p> <span class="byline">By <span class="author vcard"> <span class="fn"> <a href="http://www.dailyfinance.com/tag/@motleyfool/"> Rich Smith, The Motley Fool </a> </span> </span></span></p> <p> With a national debt still hovering around 120% of its GDP, Greece is still far from being out of the fiscal woods. As austerity measures bite, Greece's GDP will shrink further and its debt-to-GDP ratio will rise, putting it on course for further defaults -- er, &quot;restructurings.&quot; Nor is Greece alone. According to official figures, debt-to-GDP ratios elsewhere are similarly high.</p> <p> Photo: Gerasimos, an 83-year-old Greek man, picks through a heap of rubbish to salvage useful items as the marble gate of the Roman Agora is reflected in a mirror, in the Plaka district of Athens on Monday, March 12, 2012. Greece implemented the biggest debt writedown in history on Monday, swapping the bulk of its privately-held bonds with new ones worth less than half their original value. (AP Photo/Petros Giannakouris)</p>
• <p> Debt-to-GDP ratio: 130%</p> <p> </p> <p> Photo: President of Iceland &Oacute;lafur Ragnar Gr&iacute;msson prior to voting in a referendum in Reykjavik, Iceland, Saturday, March 6, 2010.&nbsp;&nbsp; Icelanders voted &quot;no&quot; in a nationwide referendum on approving the use of $5.3 billion of taxpayers' money to repay international debts.&nbsp; The &quot;no&quot; vote may complicate Iceland's effort to recover from a deep recession and a banking collapse. (AP Photo/Brynjar Gauti)</p>
• <p> Debt-to-GDP ratio: 120%</p> <p> </p> <p> Photo: A man reads a newspaper in Milan, Italy, Monday, Jan. 30, 2012. European leaders are trying to come up with ways to boost economic growth and jobs, which are being squeezed by their own governments' steep budget cuts across the continent. The 27 EU leaders meeting in Brussels are also looking for common ground on a new treaty to toughen spending rules to dig the continent out of a crippling debt crisis. (AP Photo/Luca Bruno)</p>
• <p> Debt-to-GDP ratio: 110%</p> <p> </p> <p> Photo: Workers seen at the Luis Onofre&acirc; luxury shoe factory in Oliveira de Azemeis, Portugal, Friday, Feb. 24, 2012. Debt burdens are rising fastest in European countries that have enacted the most draconian austerity programs. Portugal's unemployment rate hit a record 14 percent at the end of last year and the government imposed austerity measures to slash costs: Portugal cut pensions, reduced public servants' wages and raised taxes starting in 2010. (AP Photo/Paulo Duarte)</p>
• <p> Debt-to-GDP ratio: 105%</p> <p> </p> <p> Photo: People walk past a beggar on a bridge in Dublin Monday Feb. 20, 2012. Bank of Ireland, the only one of Ireland's six banks to avoid nationalization, reported it returned to net profit in 2011 thanks to heavy debt restructuring in the face of continued losses from dud loans. (AP Photo/Shawn Pogatchnik)</p>
• <p> Debt-to-GDP ratio: 102%</p> <p> </p> <p> Photo: The shadow of Republican presidential candidate, former Massachusetts Gov. Mitt Romney, is seen on a representation of the National Debt Clock as he spoke at a town hall meeting in Kalamazoo, Mich., Friday, Feb. 24, 2012. (AP Photo/Gerald Herbert)</p>
• <p> Debt-to-GDP ratio: 85% each</p> <p> </p> <p> Photo: Reflected in a window, people walk in London's City financial district, Tuesday, Feb. 14, 2012. Britain's AAA credit rating was put on a &quot;negative outlook&quot; by ratings agency Moody's, amid fears over weaker growth prospects and potential shocks from the eurozone crisis. Britain's Chancellor George Osborne said the assessment was a vindication of the Government's tough austerity measures and &quot;a reality check for anyone who thinks Britain can duck confronting its debts&quot;. Moody's downgraded the ratings of six countries and also put France and Austria on the same caution as the UK amid violent protests in Greece. (AP Photo/Lefteris Pitarakis)</p>
• <p> Debt-to-GDP ratio: 82%</p> <p> It makes you wonder: Who will be next in line to default? And when they do, will we call that &quot;good news,&quot; too?</p> <p> </p> <p> Photo: A pedestrian looks at a sign in a shop reading: ''One euro, price haircut'' in Athens on Thursday, March 8, 2012. (AP Photo/Thanassis Stavrakis)</p>
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In addition Europe's troubles, growth in emerging market countries, such as China, has been slowing this year.

In March, the deficit increased sharply to $52.6 billion, slightly more than the $51.8 billion initially reported last month. It was the biggest increase in more than a year and dragged on economic growth in the January-March quarter.

Most economists say the U.S. economy is growing at an annual rate of 2% to 2.5% in the current April-June quarter. That's slightly better than the 1.9% growth in the first three months of the year, but still only modest.