The American trade gap widened to hit a new record in the first quarter as imports into the US surged to meet strong domestic demand.
The deficit in the broadest measure of trade - which reflects investment flows as well as the exchange of goods and services - swelled to an all-time high of $144.9 billion for the first quarter, reflecting the American public’s seemingly insatiable appetite for foreign-made goods.
The latest snapshot of trade activity released by the US Commerce Department showed that the current account deficiit was 14.1 per cent larger than the $127 billion shortfall registered in the fourth quarter of 2003.
The first-quarter’s deficit figure was bigger than the $139.6 billion trade gap that some economists were forecasting and exceeded the previous record high of $138.2 billion set in the first quarter of 2003.
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“Americans, even with higher prices like imported goods,” said Clifford Waldman, an economist at the Manufacturers Alliance/MAPI, a research group.
“We clearly need to get the value of the dollar down further,” he said.
The current account report is considered the best measure of a country’s international economic standing because it tracks not just the goods and services reflected in the government’s monthly trade reports but also investment flows between countries and unilateral transfers, including US foreign aid payments.
The shortfall between American imports and exports was equivalent to about 5.1 per cent of the value of the US economy, according to the US Commerce Department, compared with 4.6 per cent in the previous quarter.
The dollar lost value on the news. In early trade in New York, the dollar was down 0.3 per cent against the euro. The euro was quoted at $1.2071. One dollar was worth 108.77 yen, a fal of about 0.7 per cent.
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The pound was worth $1.8381 in mid-afternoon trade, compared to $1.8361 dollars at the previous close.