Trade deficit slows for first time in a long time

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KAI RYSSDAL: The proclivity of American consumers to consume is kind of a double-edged sword. As I think we've mentioned, individual spending accounts for about 70 percent of all the economic activity in this country. That's generally considered a good thing.

Where it gets not so good is when you consider where all the goods that are bought come from. Not here, to be brief. The U.S. trade deficit is at historic levels. Has been for years. And it goes up every month. But this morning there was a big reversal, as Marketplace's Jill Barshay reports now from New York.


JILL BARSHAY: The Commerce Department reported that the monthly trade deficit fell 6.2 percent in April. Mickey Levy is chief economist at Bank of America. He says most of the decline is because America bought $3.5 billion less stuff from the rest of the world.

Mickey Levy: We're buying less consumer-oriented goods and we're buying less industrial supplies and capital goods.

The weak dollar is making those foreign products more expensive. But foreign exchange analyst Ashraf Laidi at CMC Markets says the dollar has been declining for five years and has nothing to do with the current dip in the trade deficit.

ASHRAF LAIDI: The slowdown in U.S. imports is really a reflection of the general slowdown in the U.S. economy and in aggregate demand.

Meanwhile, economies around the world are growing. Europe is climbing out of its doldrums and surpassing the growth rate of the United States.

European companies are buying more financial, telecom and insurance services from the U.S.

In New York, I'm Jill Barshay for Marketplace.

Ryssdal: On a related note, the dollar firmed up this week just in time for the foreign travel season. U.S. bond market machinations helped push the dollar to a two-week high against the euro.

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