The US trade deficit posted its biggest reduction in 10 years in April, as exports soared to a record. This suggests that trade may contribute to economic growth this quarter.
The Commerce Department reported that the trade deficit shrank 19.1%, the biggest drop since 2012, to $87.1 billion. Exports of goods and services increased 3.5% to a record high of 252.6 billion dollars.
“The big pullback in the trade deficit suggests that net trade will be a big boost to GDP growth in the second quarter,” said Michael Pearce, senior economist at Capital Economics.
A record trade deficit subtracted 3.23 percentage points from GDP in the first quarter, which contracted at an annual rate of 1.5% after growing 6.9% in the fourth quarter of 2021. Trade has detracted from GDP for seven consecutive quarters.
Growth estimates for the second quarter come in at an annualized rate of 4.8 percent.
Imports of goods and services fell 3.4% to $339.7 billion in April. Imports increased as companies replenished inventories to meet domestic demand.