U.S. Trade Deficit Fell 12.1% in Second Quarter as Exports Rose

ExportsBy MARTIN CRUTSINGER

WASHINGTON -- The U.S. current account trade deficit narrowed in the April-June period, pushed lower by an increase in American exports and cheaper oil imports.

The Commerce Department said Tuesday that the deficit in the current account decreased 12.1 percent to $117.4 billion in the second quarter. That's down from a deficit of $133.6 billion in the January-March quarter, which had been the largest in three years.

The current account is the broadest measure of trade. It tracks the sale of merchandise and services between nations as well as investment flows. Economists watch the current account as a sign of how much the United States needs to borrow from foreigners.

Many economists predict it will widen again in coming quarters. A global slowdown has dampened demand of for U.S. exports. And oil prices are rising again, in part because of increased Middle East tensions.

Europe's debt crisis has pushed much of the region into recession. The region accounts for about one-fifth of U.S. export sales. And other major export markets, including China, India and Brazil, have experienced slower growth.

The current account deficit hit an all-time high of $800.6 billion in 2006. It then shrank after a deep recession reduced U.S. demand for foreign goods by a greater amount than U.S. export sales were dampened. The trade gap began widening again after the recession ended in June 2009.

The economy grew at an anemic annual rate of 1.7 percent in the April-June quarter and job growth has been disappointing.

That prompted the Federal Reserve last week to announce new efforts aimed at boosting the economy and combating high unemployment. The Fed on Thursday said it buy an average of $40 billion a month in mortgage bonds to try to lower long-term interest rates lower and stimulate the economy. The Fed said it will keep buying bonds until the economy and job market show significant improvement.

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